Quantitative Easing Will Boost Inflation and Gold Price

The WHOLESALE MARKET gold price slipped 0.6% to $1730 in London on Thursday morning, regaining most of that dip as the European Central Bank kept its key lending rate on hold and the Bank of England extended its purchases of UK government bonds to £325 billion ($515bn).

When completed, this new Quantitative Easing will see the Bank hold nearly one-third of the UK's outstanding national debt.

"The growing consensus among central bankers is that their experiment with QE is still working," wrote Gavyn Davies, now of Fulcrum Asset Management and previously a policy advisor to the UK government, as well as head of global economics at Goldman Sachs until 2001 and chairman of the BBC until 2004, in the Financial Times on Wednesday.

"The Bank of England's latest round of quantitative easing is likely to increase the risk of higher inflation," said World Gold Council director Marcus Grubb to Reuters, "and prompt investors to seek assets, such as gold, which can act as a hedge against rising prices."

Since the Bank of England began quantitative easing 3 years ago, gold has risen 70% for Sterling investors...more