Gold Set To Explode After Fed Announces Secret QE

Summary

In this video, Rick Bender discusses the shifting economic landscape where US investors are increasingly taking on market risk, while central banks are moving toward safer assets, particularly gold. The Federal Reserve is ending quantitative tightening (QT) and preparing for quantitative easing (QE), signaling a potential rise in inflation and a weakened dollar. As central banks continue buying gold, precious metals like gold and silver are positioned for growth, offering a safeguard against economic uncertainty. Bender advises investors to consider diversifying with precious metals to protect wealth amidst growing risks in the financial system.

Takeaways

• 😀 US investors are increasingly confident and willing to embrace higher market risk for potentially higher returns.
• 😀 Central banks are actively reducing exposure to fiat currencies and increasing their gold purchases to mitigate risk, especially after the 2022 geopolitical events.
• 😀 Many investors fail to calculate their real rate of return, overlooking the impact of inflation on their portfolio.
• 😀 Despite apparent market gains, investors need to account for inflation, which can lead to negative real returns even when equity values are rising.
• 😀 The primary financial goal for many US investors is to build an emergency fund, often through high-risk investments, without fully understanding the implications of inflation or real returns.
• 😀 Central banks are running from risks such as dollar dominance and fiat currency collapse, opting for gold as a safer store of value.
• 😀 The Federal Reserve is shifting from quantitative tightening (QT) to quantitative easing (QE), signaling lower interest rates and more money in the economy, which erodes the dollar's purchasing power.
• 😀 The shift to QE could cause confusion in the markets, with asset prices rising even as economic conditions worsen.
• 😀 Gold prices are likely to continue climbing as central banks' demand for the precious metal increases due to economic uncertainty and inflation.
• 😀 Wealth preservation (via assets like gold) is seen as more reliable for long-term stability than high-risk, high-return investments, particularly during uncertain times.

Q & A

What is the current trend regarding US investors and central banks in terms of risk?

US investors are increasingly taking on market risk, driven by a sense of confidence in potential returns, while central banks around the world are moving in the opposite direction, running from risk and seeking safer assets like gold.

How did the Russia-Ukraine conflict affect central banks' gold buying?

The Russia-Ukraine conflict, along with the weaponization of the US dollar through sanctions, prompted central banks to step up their gold purchases significantly in 2022. This was partly driven by the desire to reduce reliance on the US dollar and protect against geopolitical risks.

What does the concept of 'de-dollarization' refer to, and why is it significant?

'De-dollarization' refers to the process by which countries reduce their dependence on the US dollar in international trade and reserves. It is significant because it reflects growing concerns over the stability and control of the dollar, especially in light of inflation and increasing US debt.

Why are central banks increasing their gold reserves?

Central banks are increasing their gold reserves as a hedge against various risks, including the erosion of fiat currency value, geopolitical instability, and the potential collapse of the global financial system. Gold is seen as a stable store of value in uncertain times.

What does the recent survey indicate about US investors' comfort with risk?

A recent survey reveals that US investors are increasingly comfortable with market volatility, with 38% of households reporting they are willing to accept higher levels of risk if it could lead to higher returns. This reflects a shift toward a more risk-on investment mindset.

What is the issue with many investors not calculating their real rate of return?

Many investors fail to account for inflation when calculating their returns, which leads to an overestimation of their actual financial gains. For example, if inflation outpaces the returns on their investments, they may be losing purchasing power even if their portfolio is growing in nominal terms.

How does inflation affect the real rate of return on investments?

Inflation reduces the real value of investment returns. For example, if inflation is at 10% and an investment returns 8%, the investor is actually losing purchasing power at a rate of 2%. Investors who do not factor in inflation may mistakenly believe they are profiting when they are not.

What is the relationship between the Federal Reserve's policies and the price of gold?

The Federal Reserve's policies, particularly the transition from quantitative tightening (QT) to quantitative easing (QE), are expected to increase inflationary pressures and erode the value of the dollar. As a result, central banks and investors are likely to continue buying gold as a safe haven, pushing its price higher.

What is the significance of Jerome Powell's comments on the US labor market?

Jerome Powell's comments highlight concerns about the US labor market, which is showing signs of strain. He signaled that the Federal Reserve may need to implement more rate cuts to protect the labor market, suggesting that the economy is facing significant challenges despite the booming stock market.

Why does the speaker suggest holding gold and silver as part of an investment portfolio?

The speaker suggests holding 25% of an investment portfolio in physical gold, silver, and other precious metals as a form of financial insurance. Given the risks in the market, such as inflation, geopolitical instability, and the Federal Reserve's policies, precious metals are seen as a way to preserve wealth and hedge against future economic downturns.