RSS FeedRSS

In June the Fed will pull the plug on three years of economic supports and buying gold coins today will pay off regardless of the repercussions.

March 17, 2011 – In June the Fed will pull the plug on three years of economic supports and buying gold coins today will pay off regardless of the repercussions.

Believing that the Fed’s withdrawal from the market will send treasuries sharply down, Pimco, the world’s biggest bond fund, has divested 100% of its holdings of US debt. The risk, which would ripple throughout the bond market, has many investors converting their bond holdings into strong ETF positions.

Another concern, assuming economic recovery picks up momentum, is that abruptly removing the 70% of Treasury demand currently supplied by the Fed would trigger inflation. But that is a huge assumption.

Michael Mackenzie and Dan McCrum report in MarketWatch that Jeffrey Gundlach, investment manager DoubleLine’s CEO, believes that any effect will be moderate and short lived because “Higher oil and food prices, rather than stoking wider inflation, could drag on the economy.” “We are near to another period of economic disappointment,” adds Robert Kessler of Kessler Investment Advisers.

The list of America’s economic woes is indeed long: wage growth is stagnant, homeowners hold massive negative equity, structural unemployment is deeply entrenched, the trade deficit continues to climb, and private sector debt has seen the greatest deleveraging since the Great Depression. Together they could easily pull the economy down into a double-dip recession.

Gold coin investments are widely accepted as a hedge against inflation, but historically the dollar has been the safe haven of choice. However, that status has been steadily weakening as the Fed pumps vast quantities of liquidity into the system. It seems most unlikely that investors will flock to pick up where the Fed leaves off, seeking shelter from recession in the recession’s cause. Instead, they will turn to hard assets.

Whether we are headed towards inflation or recession, investments made in gold coins today are certain to pay back handsomely when the Fed pulls the plug.

Kevin Johnson

Senior Staff Writer – GoldCoin.net

Get Your Complementary Award Winning Guides Below

 Publish Real Money Magazine

 Publish Gold Investment Magazine

 Publish IRA 401K Kit Magazine

 Real Money Magazine

captcha