How the Fed could create a new gold rush

The Federal Reserve is printing dollars with wild abandon. Many people believe that that could put paid to any fears of deflation - and could mean a new boom in gold mining.

There are only two things gold bulls should worry about from this point forward, now that the general commodity correction is out of the way and the froth has been worked out of the market: deflation in the strict sense of the term (monetary, not asset deflation) or a suddenly brightening economic outlook, both of which, in this writer's opinion, would require a political austerity hardly imaginable these days.

As far as deflation goes, we saw that the Federal Reserve inflated its balance sheet by an astonishing US$600 billion (almost 70%) in September, $170 billion of which ended up as an unsterilised liquidity injection into the financial system - also unprecedented any way it is measured.

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