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Gold and an Ever-Growing Balance Sheet

November 9, 2012

“Gold could not have asked for a better outcome,” with a second term for Obama, a Democratic Senate and Republican House, says UBS Investment Research. As the research firm explains in its morning note, “the high likelihood of political gridlock up ahead as attention now turns to the fiscal cliff and the debt ceiling certainly presents upside opportunities for gold.”
-Frank Holmes, ceo, U.S. Global Investors

While Americans were still submitting their ballots, gold rallied on the possibility of a President Barack Obama reelection. With presidential results confirmed, it appears that Ben Bernanke’s job of hovering over the economy and dropping parachutes of money out of his helicopter is secure.

“Gold could not have asked for a better outcome,” with a second term for Obama, a Democratic Senate and Republican House, says UBS Investment Research. As the research firm explains in its morning note, “the high likelihood of political gridlock up ahead as attention now turns to the fiscal cliff and the debt ceiling certainly presents upside opportunities for gold.”

UBS says the gold market isn’t even pricing in the outcome of the next Federal Open Market Committee meeting in December when the “conclusion of Operation Twist will morph into further quantitative easing.”

Our chart of the week shows the substantial impact of the Federal Reserve’s decision. In a weekly report, Robert Perli of International Strategy and Investment (ISI) projected the enormous growth of the U.S. balance sheet if quantitative easing continues over the next few years.

 

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