Investing in Gold

What Will $40 Billion A Month Do To Gold Prices?

Last week Federal Reserve Chairman Ben Bernanke announced that the Fed would begin to purchase $40 billion a month in mortgage backed securities in an effort to boost the American economy. This bold move may be able to keep interest rates low, but it will have an effect on the value of the American dollar.

When the Dollar is weak, people turn to gold as a safe haven investment. Not only is gold viewed as safe, it is viewed as a hedge against inflation. One of the largest concerns at this time is that the $2 trillion bond purchasing program will drive inflation skywards.

An economist at Bank of America has announced that the target for gold prices by the end of 2014 will be around $2,400 per ounce. He believes if current trends in the gold market continue, you will see a 0.7% increase in gold prices within the next four months. He also predicts gold hitting the $2,000 mark by the end of June 2013.

Of course, this can easily be changed if there are further financial problems in the United States and the rest of the world. If the Euro, for instance, goes into meltdown, you could see gold surpassing this predicted rate at a very fast pace.

The new bond buying program is anticipated to keep interest rates near zero until mid-2015. During this period it is easy to see that gold will continue to rise.