nothing to do but wait, page-18

Brow, QE3 is confirmed, open ended and it began last month.
It runs at $85 billion per month which works out to just over $1 trill per year.
That compares to around $1.4 trill for QE1 (Nov 2008 to June 2010) which took the POG up around $600 from $680 to $1270 for a rise of around 86%.
QE2 was only half the size of QE1 for $600 mill from Nov 2010 to 2nd qtr 2011. POG moved from an $1160 low in Aug 2010 to $1900 in Sep 2011.
Again it increased by around $600 or a rise of 63%.
QE3 will be as large as QE1 and twice the size of QE2 by May next year, and remains open ended.

Some argue there is no velocity of money to drive inflation and the economy, but the fact remains that the monetary base has been rising dramatically since 2008 and the POG has followed it.
There was a pause between QE2 and QE3 and the chart shows a flattening of the monetary base over this period and this corresponds to the consolidation/correction for gold.
This flattening will now end and we will see a strong rise so it’s difficult to bet against POG rising strongly again this year and into next year.
The chart also shows a steady and very significant rise in the monetary base before the GFC so why would anyone believe that will stop in the future?
That goes back to the time the gold standard was dropped.
Without another gold standard or an equivalent govts will continue to print and gold should continue higher over time.
A big correction like the one in 1980 (in magnitude and time) should only be likely if gold becomes over-valued first. In 1980 POG actually got higher than the price required to cover the US money supply and the US could have gone back on a full gold standard if it chose to. Every dollar was backed by Fed gold holdings.
The price is nowhere near high enough now to do the same after the money supply has grown out of control and gold has not come even close to keeping up.
Anyone telling you gold is in a bubble is not looking at the numbers. A four fold increase in price in 30 years relative to the increase in monetary supply is not a bubble.


http://en.wikipedia.org/wiki/Quantitative_easing

“The US Federal Reserve held between $700 billion and $800 billion of Treasury notes on its balance sheet before the recession.”
“In late November 2008, the Fed started buying $600 billion in Mortgage-backed securities (MBS).[43] By March 2009, it held $1.75 trillion of bank debt, MBS, and Treasury notes, and reached a peak of $2.1 trillion in June 2010.”
“In November 2010, the Fed announced a second round of quantitative easing, or "QE2", buying $600 billion of Treasury securities by the end of the second quarter of 2011.”