Radical Monetary Policies and Gold Prices

Radical monetary policies at Federal Reserve and central banks could result in higher gold prices.

John Hathaway, Senior Managing Director at Tocqueville Asset Management, had sharp words for the Federal Reserve recently when asked about the U.S. dollar and his long term view on gold.

“Look at the long-term picture: gold has outperformed stocks and bonds since 2000,” says Hathaway. “Long term, what’s behind gold is monetary debasement, which [is the result of] radical monetary policies conducted by the Federal Reserve, European central banks, China and Japan.”

Hathaway acknowledges that recent scary events like North Korea’s missile launches have been part of the recent day-to-day equation for prices. Still, he urges investors to keep their eyes on what is happening with paper currencies globally.

“Basically, the value of fiat money has continued to decline and that is what I would keep my eye on. It’s the most important thing by far.”

Hathaway is emphatic in his view that gold is a legitimate currency. As he points out, ”central banks have bought more gold in the last couple of years than U.S. Treasuries. They use it as a reserve asset!”

Hathaway adds: “The stock market is [at record highs] because the Fed and other central banks have been printing money. If they stop doing that, there will be hell to pay and a lot of china being broken.“


Recent comments from Federal Reserve officials have indicated that further monetary policy changes could lie ahead. This includes the possibility of higher rates and a smaller balance sheet for the central bank. However, Hathaway is not convinced that this talk will translate into action.

“The Federal Reserve is a lot of talk and bluster,” says Hathaway. “There’s all this drama about shrinking the Fed balance sheet. They’ve put themselves into a corner they can’t get out of and if they try, they’ll destabilize the equity market.”

“The trend that started when radical monetary policy began is still in place,” Hathaway concludes. “We are in a new bull cycle [for gold].”


Despite Fed bluster and record stock market levels, gold provided a healthy quarterly return for investors and retirement plans.

Experts say there could be more ahead:

1.Danske Banke analyst Jens Pedersen says any downside in gold is likely to be limited because of looming geopolitical tensions around North Korea and Iran that could flare up any time.

2.Bloomberg Intelligence analyst Mike McGlone says that gold could do better than the S&P 500 in a tightening cycle. McGlone explains that rate hikes are typically coincident with inflation and he believes that the best companion diversifier is gold, not stocks. McGlone thinks gold investors are seeking safe haven refuge today from political gridlock and rising geopolitical tensions, particularly the escalating war of words with North Korea. For these reasons, McGlone sees the odds tipped more in favor of gold right now. According to McGlone, if a record-setting stock market can’t beat gold, the precious metal is worthy of greater attention.

3.RBC Wealth Management Managing Director George Gero is seeing bargain hunting emerge in gold. According to Gero, we are finished with all the ‘Fed Speak’ and the probability of a Fed rate hike in December is already priced into the market. Gero thinks gold has real upside potential if worrisome headlines emerge on the geopolitical front.

4.World Gold Council chairman Randall Oliphant warns that gold production is plateauing and the world may have already produced the most gold in a year that it ever will. Oliphant says gold prices could climb as high as $1,400 an ounce in the next 12 months.


Many economists believe that the current administration’s tax-reform blueprint could sharply increase the federal government’s budget deficit. The budget shortfalls that economists foresee could add more than $10 trillion-plus in federal debt over the next decade!

That’s a staggering debt, even for a country as rich and powerful as America. It would be another crushing weight bearing down on our gradually collapsing dollar.

Yet the stock market is still trading near all-time highs and investor complacency about global risks is still too widespread.

With gold prices at current levels, this is an opportune time to consider physical gold for your retirement portfolio. It is a recognized safe-haven asset offering diversification, privacy, liquidity and peace of mind for your IRA.

The risks to our country and the dollar are real and growing. Physical assets in your safe at home or in your IRA can be of tremendous comfort when the evening news comes on.

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