Collectively, the world’s Central Banks have put more than $10 trillion into the financial system since 2008. To put that number into perspective, it’s equal to roughly 15% of global GDP.
Despite this rampant money printing, the price of Gold has in fact fallen against every major world currency since 2011.
In a time in which every major central bank is expanding its balance sheet through money printing, Gold has fallen against every major currency.
Indeed, in the US, the Federal Reserve is now expanding its balance sheet at a pace of nearly $1 trillion per year. The Fed balance sheet is already at $3.8 trillion and will likely surpass $4 trillion in early 2014.
Any yet, the price of Gold, denominated in US Dollars is lower today than it was when back in early 2011, when the Fed’s balance sheet was just $2.4 trillion.
This doesn’t add up. Gold has experienced multiple sharp corrections during its 10+year bull market. This is likely another one.
Someday, and I cannot say when, Gold will catch its next leg up. When it does, we’ll finally see the market action that a $10+ trillion expansion in Central Bank balance sheets warrants.
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Phoenix Capital Research