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« The Federal Reserve: The Greatest Scam In History (revision B) | Main | President Obama and those AIG Bonuses! »

Federal Reserve to Buy Treasuries fires Gold Prices!

Gold Chart 19mar09

Chart courtesy of

The Federal Reserve has sprung a surprise on the markets by announcing its intention to buy $300 billion in longer-term Treasuries in order to assist the economic recovery.

We were watching gold prices decline throughout the trading day in New York when 'pop' they suddenly took off in a vertical ascent. We tracked around the air waves and found that the BBC World Service had a mention in their business broadcast about the Fed making the above purchase, then we found this article on Market Watch.

The Fed also tweaked its other credit-easing programs by committing to buy more mortgage-backed securities and agency debt and include more asset-backed securities under a new credit facility starting this week.

Most analysts had thought that the Federal Open Market Committee - the policy making arm of the central bank -- would keep the weapon of buying Treasuries in reserve in case of a crisis.

The decision to buy Treasuries shows that the crisis is here.

"To provide greater support to mortgage lending and housing markets," the FOMC said it would purchase an additional $750 billion of agency mortgage-backed securities. This brings the total amount of agency mortgage-backed securities to $1.25 trillion.

The Fed said it would double its purchase of agency debt to $200 billion.

"Moreover, to help improve conditions in private credit markets, the FOMC decided to purchase up to $300 billion of longer-term Treasury securities over the next six months," the statement said.

In addition, many unspecified types of assets will be included in the newest Fed credit facility, the Term Asset-Banked securities.

All of these purchases will increase the size of the Fed's balance sheet. The central bank has already doubled the size of its balance sheet to just below $2 trillion.

Click this link to read the article in full.

Our guess is that the word crisis put a rocket under the price of gold as the Kitco chart above aptly captures.

We are not out of the woods yet as some commentators have suggested – the team here think that we are just entering the woods and its not a pretty sight. Put your hard hats on and prepare for some wild swings in both directions, this market is hanging on to every word and action that hits the air waves and re-acting to whatever the latest sound bite might be. For us the order of the day is stay calm and hold on tight to our stocks. If you are a trader then there are a few 'options' either side of the strike price that will surely get your adrenalin pumping, if thats what you want!

Got a comment – then let us have it!

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Reader Comments (31)

Well if you arent prepared to watch, listen, read and learn. then your no different from the 95% of the population.. And theres nothing more i can help you with.. Good luck in life !

March 23, 2009 | Unregistered CommenterGold Bullion Bars

Is it possible that George Orwell could be right when he wrote "1984", and Big Brother?

If the book is accurate then we can't hold the chronology against him, can we?


March 23, 2009 | Unregistered CommenterJohn Ell

One thing we know for sure. Pigs aren't stupid. In fact they are one of the most intelligent animals alive today.
Since goverments in this world like to build power and expand goverment to suit their own needs, its would be legitimate to say that fear is obviously used by some strategists in the administration to get party constituents lined up all together. Popularity is key to get things done since government is 'chosen' by its people in a true democracy.

I have my most doubts and conspiracy theorems with the former Bush Jr. administration. 9-11, Iraq war, you name it. Republicans don't get my mental support that quickly. They tend to be strive to some sort of Big Brother government by using Fear on its people.

Just my 2 cents.

March 23, 2009 | Unregistered Commenterde Graaf

To GoldBullion:

I just spotted your reply. I do know what codex Alimentarius is. Its an WHO international agreement based from 1962. During the years it has been updated due to increased international trade in food and supplements. It ensures the safety of ingredients for consumers as far as they are known safe for consumption.
Ever heard of the milkpowder incident in China recently? Thats why these rules are in place.

There are some trivial sources which claim that the codex Alimentarius is an organisation, which pursues world ascendancy by complete control concerning food in the world. This plot theory originates from the statement that former IG Farben-topman Fritz Ter Meer (condemned in Neurenberg during the IG Farben-proces) became one of the founders of the codex Alimentarius. Fritz Ter Meer would supposed to be the founder of this ideology.

Without this agreements, your family and children would not have any idea what you been eating from China, India etc. This agreement ensures you are able to eat safe with border inspections on supplements and foodtests.
This is applicable in Europe since the start of mankind. Nothing to worry about.

You are way to far in conspiracy. Time to wake up I think. Another American dream shattered... ;)

March 23, 2009 | Unregistered Commenterde Graaf

ok degraff.. Its pretty obvious youve swollowed there lies hook line and sinker.. Feel free to line up and get your RFID chip. And dont forget to hand over your gun, your children and any other belongings that you think you have.. Because they are not yours.. you do not own them and you have no claim too them..

Theres no point debating it anymore.. Your too indoctrinated like 95% of the population, so atleast your in the majority.

- Peace buddy good luck to you and your family..

March 23, 2009 | Unregistered CommenterGold Bullion Bars

Well, you should know I'm from Europe. Having said that, we are not allowed to keep weapons at home unless we train and receive a gun permit. No 2nd amendment here in Holland. No need for that neither. Saves a lot of lives and criminal behaviour.

Lets get back on topic shall we. I wish you well in life like any other person. And I will respect your thoughts and discuss them, but I do not agree with all of them as you can see.

Lets talk about our common interest. Gold. ;)

March 23, 2009 | Unregistered Commenterde Graaf

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