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The Federal Reserve has a dual mandate set by Congress of maximum employment and stable prices. During
Chairman Bernanke’s most recent press conference he indicated that the Federal Reserve has done a better job of maintaining price stability while falling short of fostering maximum employment. [As such,] we believe the Federal Reserve will continue to increase the monetary base and weaken the dollar as long as unemployment remains elevated. While the economy (measured by real GDP) and the unemployment rate have not benefited from a substantial increase in the monetary base, the price of gold and silver have benefited from money printing. We believe this statement is quite important for monetary policy and for investors. [Let us explain further.] Words: 388
So says an article* by Parsimony Investment Research (http://www.parsimonyresearch.com/) posted on SeekingAlpha.com which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited ([ ]), abridged (…) and reformatted (some sub-titles and bold/italics emphases) below for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.
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The article goes on to say, in part:
We believe the Bernanke and the Federal Reserve are more focused on reducing unemployment given the greater near-term social consequences of unemployment, particularly long-term unemployment as defined by U-6 and youth unemployment.
The U-6 unemployment rate is 16.2% and the youth unemployment is 18.1%.
The chart below from the Bureau of Labor statistics shows that despite the easy monetary policy and the fiscal stimulus packages, there is an incremental 2 million people unemployed.
(Click charts to expand)
Between 2008 and 2011, the Federal Reserve has significantly expanded its balance sheet depicted by the monetary base (red line below) despite generating only a modest increase in real GDP (green line below).
Tactical Strategy
The physical markets for both gold and silver should determine the long-term price of the metal and we believe individual investors should continue to accumulate physical precious metals to diversify their wealth and help mitigate the loss of purchasing power from central bank intervention.
*http://seekingalpha.com/article/307282-federal-reserve-falling-short-on-its-dual-mandate-buy-precious-metals?ifp=0&source=email_macro_view
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