Does the Fed’s About Face Mean QE4 Is in the Cards?

Could quantitative easing be in our future? QE4 could be just around the corner…

The notion of a global slowdown has been widely covered by the financial media in recent months. Weakness in key areas such as manufacturing has been seen in both China and the U.S. The Eurozone is seeing its own struggles as well, with Italy already in recession and Germany perhaps on its way.

The slowing global economy has led the U.S. Fed to do a major about-face in recent weeks. It was not long ago that the central bank had another three rate hikes penciled in for 2019. The Fed recently took any further hikes off the table and took a decidedly more-dovish tone. Some analysts are even seeing the central bank cutting rates before the end of the year.

The Fed Maintaining Distance from President Trump

U.S. President Trump’s displeasure with the Fed is well-known. Trump has taken numerous verbal shots at the central bank and its Chairman, Jerome Powell. The Fed has tried to maintain its independence in recent months, suggesting that any decisions made would be based on the data and not politics. Even after the Fed made the U-turn on further rate hikes, the criticism from Trump is as strong as ever.

It is impossible to say if politics were a part of the Fed’s decision-making process. President Trump may, however, attempt to keep the pressure on the Fed to keep rates low and/or begin cutting. In fact, White House Economic Advisor Larry Kudlow recently called for the central bank to cut rates by a half-point “immediately.”

QE4 Could Take the Fed’s Balance Sheet Higher

Trump’s reelection bid may hinge on the strength of the economy and U.S. markets. Clearly, lower interest rates may keep the economy from falling into recession. With rates already at low levels, however, the Fed may have to resort to asset purchases again. A “QE4” could take the Fed’s balance sheet back over the $4 trillion mark and back to previous highs-or beyond.

Although rate cuts and asset purchases may keep a floor under stocks, they are not bullish for the dollar. Such monetary policies would likely weaken the greenback significantly and could eventually lead to sharp inflationary pressures.

Now Is the Time to Diversify

With all indications pointing to more easing in the U.S. and elsewhere, now may be the ideal time to diversify with asset classes that may potentially outperform during a recession and subsequent monetary policy easing. There may be no better asset class to turn to than physical gold.

Adding gold to your portfolio has never been easier. Simply pick up the phone and speak with an Advantage Gold account executive today about the potential benefits of gold ownership and to learn more about the role this key asset class may play in the years and decades ahead. Our associates are here to answer any questions you may have and can even show you how easy it is to build a significant allocation using an IRA account.

Don’t wait for the next major stock market collapse or for the Fed to sink the dollar before acting. Explore your options for gold ownership today. Call Advantage Gold at 1-800-341-8584 to get started now.

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