Hey IDC Holders
Indochine Mining is bringing the Mt Kare gold mine to life in the best time for over 50 years!
We all know the direct link between low interest rates, money printing and the purchases of financial assets by Central Banks with the price of gold!(Pls see images at the bottom of the email)
Mr Bernanke 30 mins ago just announced they will expand their monthly QE from $40Billion or $480Billion in 2013 to $85Billion per month or $1.02Trillion worth of QE/Money Printing and MBS/30Yr Bond Purchases!
We can expect the price of gold to break $2000/Oz in 2013, quite comfortably.
It is going to be a fantastic time for gold and gold stocks in 2013!
Cheers Nectar
IDC.AX
Fed Expands Asset Buying, Links Rates to Joblessness
By Joshua Zumbrun & Jeff Kearns - Dec 13, 2012 6:00 AM ET
John Moore/Getty Images
Federal Reserve Chairman Ben Bernanke is seen on a screen as he addresses the Economic Club of New York on Nov. 20, 2012 in New York City.
The Federal Reserve said it will buy $45 billion a month of Treasury securities starting in January, expanding its asset-purchase program, and for the first time linked the outlook for its main interest rate to unemployment and inflation.
Bernanke Says Fed Expanding Asset-Purchase Program
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Dec. 12 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke says the central bank will buy $45 billion a month of Treasury securities starting in January, expanding its asset-purchase program. Bernanke speaks at a news conference in Washington. (This is an excerpt. Source: Bloomberg)
“The committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor-market conditions,” the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington.
The Fed said interest rates will stay low “at least as long” as the unemployment rate remains above 6.5 percent and if inflation “between one and two years ahead” is projected to be no more than 2.5 percent. The committee “views these thresholds as consistent with its earlier date-based guidance.” The Fed dropped its earlier pledge to hold interest rates near zero “at least through mid-2015.”
Chairman Ben S. Bernanke is using his unlimited authority to buy Treasuries in an unprecedented effort to stoke growth and reduce 7.7 percent unemployment. The Fed acted in its last regular meeting of the year as lawmakers and the Obama administration continue talks to avert more than $600 billion of automatic spending cuts and tax increases that threaten to throw the country into a recession.
Stocks and Treasury yields rose after the statement. The Standard & Poor’s 500 Index climbed 0.7 percent to 1,437.67 at 1:38 p.m. in New York. The yield on the 10-year Treasury note was 1.69 percent, compared with 1.66 percent late yesterday.
‘Very Active’
“The Fed has been very active since the crisis began, and they are feeling some time pressure because the longer Americans stay unemployed, the harder it is to incorporate them back into the labor force,” said Dana Saporta, a U.S. economist at Credit Suisse Group AG in New York.
The buying announced today will be in addition to $40 billion a month of mortgage-debt purchases. The FOMC said asset buying will continue “if the outlook for the labor market does not improve substantially.”
Related:
U.S. Stocks Advance as Fed Plans More Treasury Purchases
Treasuries Drop as Fed Bond-Purchase Boost Spurs Inflation Bets
Dollar Declines as Fed Adopts More Treasuries-Buying Stimulus
The latest move will follow the expiration at the end of this year of Operation Twist, in which the central bank each month has swapped about $45 billion in short-term Treasuries for an equal amount of long-term debt. That program kept the total size of the balance sheet unchanged, while the new purchases will expand the Fed’s holdings.
The Fed said that a highly accommodative monetary policy will be appropriate “for a considerable time after the asset purchase program ends and the economic recovery strengthens.”
Maturing Debt
A majority of Federal Reserve officials don’t expect to raise the main interest rate until 2015, when the jobless rate is forecast to fall to between 6 percent and 6.6 percent, according to projections released after the statement. Bernanke plans to hold a press conference at 2:15 p.m.
Federal Open Market Committee participants forecast today that gross domestic product will expand 2.3 percent to 3 percent next year, compared with a forecast of 2.5 percent to 3 percent in September. Estimates for 2014 are from 3 percent to 3.5 percent, versus 3 percent to 3.8 percent in the previous projection, according to the central tendency projections, which exclude the three highest and three lowest of 19.
The central bank will also continue reinvesting its portfolio of maturing housing debt into agency mortgage-backed securities and said it will resume rolling over maturing Treasury securities.
Lacker Dissents
Richmond Fed President Jeffrey Lacker dissented for the eighth consecutive meeting, saying he opposed the asset purchase program. Lacker opposed the FOMC’s June decision to extend Operation Twist through the end of the year along with additional asset purchases, saying more bond buying probably won’t quicken economic growth.
Lacker is the second Fed official under Bernanke to dissent at every meeting in a calendar year, following former Kansas City Fed President Thomas Hoenig who did the same in 2010.
Economists in a Bloomberg survey forecast that the Fed would announce purchases of $45 billion a month of Treasuries in addition to the existing $40 billion a month of mortgage debt.
Fed officials met as the economy showed few signs of reaching the pace of growth needed to put 12 million unemployed Americans back to work. While housing and auto sales have picked up, business spending and exports -- two drivers of the three- year expansion -- have cooled amid slowing global growth.
The world’s largest economy next year is forecast to expand 2 percent, according to the median estimate in a Bloomberg survey of economists, compared with an average of 3 percent in the 10 years through 2007.
Financial Crisis
“The accumulating evidence does appear consistent with the financial crisis and the associated recession having reduced the potential growth rate of our economy somewhat during the past few years,” Bernanke, 58, said in a Nov. 20 speech in New York.
Three years into the recovery, the 7.7 percent jobless rate remains higher than Fed officials’ estimates for full employment, which range from 5.2 percent to 6 percent. Employers added 146,000 workers to payrolls in November, less than the monthly average of 151,000 this year and the 153,000 in 2011.
Job growth is “still disappointing and still falls short of what they want to see,” Julia Coronado, chief economist for North America at BNP Paribas SA in New York and a former Fed economist, said before today’s statement.
Slow growth has left the economy vulnerable to risks posed by the European debt crisis and the automatic tax increases and spending cuts that the Congressional Budget Office has said would throw the country back into a recession if they take effect next year.
‘Fiscal Drag’
“Even if we don’t go off the fiscal cliff there’s going to be some federal fiscal drag next year, and there’s still Europe,” Josh Feinman, the New York-based global chief economist for DB Advisors, the Deutsche Bank AG asset management unit that oversees about $228 billion, and a former Fed senior economist, said before the Fed statement.
Euro area leaders are set to meet this week in Brussels. Finance ministers will tackle divisions over euro-area bank supervision today, followed on Dec. 13 by a meeting on Greece’s bailout and by a summit on the longer-term overhaul of the euro zone on Dec. 13-14.
Bernanke, a former Princeton University professor, has stretched the bounds of monetary policy to pull the nation out of the deepest recession since the Great Depression and then to keep the economy expanding. The current round of asset purchases is the central bank’s third, and this time the Fed has set no limit on its size or duration.
The purchases helped fuel gains in stock prices, boosting household wealth and confidence. The Standard & Poor’s 500 Index has gained 14 percent this year through yesterday. The yield on the 10-year Treasury note was 1.66 percent yesterday.
Little Risk
Debt traders see little risk of inflation. The break-even rate for five-year Treasury Inflation Protected Securities -- a yield differential between the inflation-linked debt and Treasuries -- was 2.07 percentage points on Dec. 11. That’s a measure of the outlook for consumer prices over the life of the securities.
Fed purchases of mortgage debt have helped pushed interest rates on home loans to record lows, spurring a revival in the industry that was at the heart of the financial crisis.
Construction of new houses in October began at the fastest pace since 2008 as builders broke ground on 894,000 units at an annual pace. Prices rose 3 percent from a year earlier in September, according to the S&P Case-Shiller index of home prices in 20 cities.
Lowe’s Rallies
Lowe’s Cos., the second-largest U.S. home-improvement retailer, has rallied 37 percent this year as consumers spend more on appliances, hardware and tools.
“These recent positive trends are helping consumers regain confidence in both their local housing markets and their home value,” Robert Hull, the Mooresville, North Carolina-based retailer’s chief financial officer, said on a Dec. 5 conference call with industry analysts.
Still, U.S. exports have cooled as a global growth slowdown curbs demand for American goods. That, along with the risk of fiscal tightening in the U.S. next year, has prompted companies to limit capital spending.
The trade deficit widened in October as exports slumped the most in four years, a Commerce Department report showed yesterday. Spending on business equipment and software dropped at a 2.7 percent annual rate from July through September, the worst performance since the three months to June 2009, when the recession ended, according to another Commerce Department report.
Rebound Seen
There are signs business spending is poised to rebound next year if forecasts for a pickup in global growth hold up and U.S. lawmakers avoid a deep fiscal contraction.
Apple Inc., Starbucks Corp. and Chevron Corp. are among those announcing additional expenditure plans. Companies, excluding financial institutions, are sitting on a record $1.74 trillion in liquid assets that could be put to use.
Bernanke, in his New York speech last month, also voiced some optimism. A resolution to the U.S. fiscal deadlock “could help make the new year a very good one for the American economy,” he said.
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