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Tuesday, September 21, 2010

Gold Prices Surge on Weak Economy Comments from Federal Reserve

While we don't need the Federal Reserve to tell us the U.S. economy is weak and anemic, gold investors and others were looking to see what they would say and announce, as it would definitely have a temporary impact at minimum, and a longer term one, depending on what they said.

For once the Federal Reserve said they weren't going to do anything at this time, and would wait to see if the economy could heal itself.

Too bad the schizophrenic central bank doesn't retain that policy. But then again, gold prices wouldn't be doing what they are doing if they didn't interfere.

The conclusion of the Federal Reserve wasn't any different than the last FOMC meeting, and that was they were still concerned about the economy, and stood ready to throw more money at it if they thought is is needed.

Like $1.7 trillion thrown down the hole wasn't enough last time.

If there weren't elections coming in November, the spending-addicted Fed would probably have interfered again, but since the Democrats are already going to get hammered, they didn't have the will to do what their addiction pressures them to do.

But gold prices responded to the comments on the weak economy, and they surged quickly once the news of the contents of the meeting were released.

Because it's nothing new, it's doubtful it'll have any significant effect on gold prices, although it does remind everyone of how bad the U.S economy really is.

Gold in the short term should continue to run up on the fundamentals, and the after the elections we should see an announcement from the Fed that they're ready to implement quantitative easing again, which will cause gold to soar price.

Of course that could happen without that, as many other factors outside the U.S., like growing geopolitical stress in Asia, along with the ongoing sovereign debt debacle in Europe, could push gold prices up quickly if and when any new changes come about, which they are almost sure to.

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