Jerome Powell, the Chairman of the Federal Reserve has given the strongest hint yet that more quantitative easing could be on the way after saying that the Fed “would fight the next economic downturn by buying large amounts of government debt to drive down long-term interest rates”. He also noted that the Reserve had, “two recession-fighting tools; buying government bonds, known as QED, and communicating clearly with markets about interest rate policies.”
His comments contradict statements made last year, when monthly accumulations of $30 billion worth of treasury bills were denied to be part of moves towards quantitative easing.
The timing of Powell’s comments to congress on Wednesday is interesting – and offers more reasons to buy now for gold investors – because it coincides with Wall Street drops and mixed earnings and economic data, all to the backdrop of the coronavirus.
The act of injecting more money into the economy via quantitative easing is only initiated during times of economic uncertainty. The last few instances of quantitative easing have shown us that gold prices surge – making it the perfect time to buy now to be prepared.