Posted on 09 September 2015 with 7 comments from readers
The original ‘Dr. Doom’ Marc Faber is warning that the Fed’s raising of interest rates will cause such an almighty crash that it will be forced to revert to money printing with QE4.
He remembers how Fed policy reversed the 2008-9 slump in equities but the biggest gainer in the next two years was precious metals. Could history be about to repeat itself again?
What is QE?
Quantitative easing is an unusual financial policy. In this, a central bank can purchase some government as well as few other securities from the market. This is done to boost the money supply as well as to lessen the interest rates. QE has been implemented a few times recently. The global economic crisis of 2007-08, The Federal Reserve, the central bank of U.S has implemented series of quantitative easing. Similarly, other Banks as the European Central or the Bank of Japan has been seen executing QE.
Stock markets react to every small or big change happening globally. Quantitative easing lowers the interest rates affecting the returns on normally safe investments including certificates of deposit, money market accounts and highly rated bonds. These situations leave investors no choice but to take few risks in order to get a return. They tend to take their portfolios to the equities hoping to push the stock market prices.
The gold market is also affected by Quantitative easing depending on the investor’s viewpoint. During the financial disaster of 2008, Quantitative easing had a good impact on gold. But soon after in QE2 in 2011 as the U.S. economy improved, the gold price was dropped. But gold has proved to be the investor’s safe haven from times. Not only because gold is rare or that its value is high, gold has many other properties that make it almost impossible to replace. Same goes for the other precious metals like gold. Gold is in the stock market for long but it has proved it can not only survive alone but can be working well with other emerging revolutions like the cryptocurrencies.
In times like this, it is recommended to do a thorough study of all the investments instead of just considering the effects of quantitative easing. It is recommended to diversify the installments using the emerging systems as Qprofit System. Please read the related articles in dept to know if Qprofit System is not a scam.
Video link click here!