Perfect Storm Of QE3 & Fiscal Cliff May Send Gold Above $2000

September 12, 2012

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The European Central Bank’s decision to buy bonds in order to negate the eurozone’s debt crisis has investors running toward gold, and if the U.S. central bank does follow up with a third round of quantitative easing, the price of the yellow metal could hit $2000 by 2013, according to an article on Hard Assets Investor.

In comparison, when Federal Reserve Chairman Ben Bernanke announced QE2 two years ago, the precious metal rally began at $1200 and ended between $1500 and $1600, the article said.

Also, total ETF gold holdings grew to 79.7 million troy ounces as a result—increasing by 0.7 million ounces, or 0.83 percent, in that time frame. Silver was the only precious metal to lose holdings, according to HAI.

Expect to see a similar pattern regarding holdings and prices should the Fed’s QE3 materialize as well as the ECB’s stimulus program, the article said. Gold-focused ETFs like the SPDR Gold Trust (NYSEArca: GLD) and the iShares Gold Trust (NYSEArca: IAU) are likely to rally as a result.

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