QE3 could be even bigger than QE2 and that’s very bullish for Gold

Peter Schiff, CEO and Chief Global Strategist of Euro Pacific Capital, made his case that the recent weakness in the price of gold and silver presents a “buying opportunity.” Schiff, a long-time bull on the gold price, stated in a King World News interview that “I do believe the U.S. economy is slowing down, in fact I think it’s going to slow a lot more than people realize. But for that reason, I think that quantitative easing will not end over the summer. In fact, I think the Fed is going to step it up. QE3 could be even bigger than QE2 and that’s very bullish for Gold and very bearish for the dollar.”

While Schiff’s outlook on monetary policy aligns with his very bullish stance on the gold price, Wednesday’s release of the latest Fed minutes paints a less clear picture. The Fed minutes, a transcript of the latest Federal Open Market Committee (FOMC) meeting, disclosed a wide variety of opinions among U.S. central bankers on the Fed’s appropriate path moving forward.

An initial glance at the Fed minutes revealed discussions of asset sales, raising the Federal Funds rate, and other measures suggesting that Chairman Ben Bernanke and the Fed Governors were considering tightening monetary policy.

However, although the Fed minutes provided significant color on options for “normalizing” monetary policy, it emphasized that a “move toward such normalization” would not necessarily “begin soon.” Furthermore, the minutes noted that “participants expressed a range of views on some aspects of a normalization strategy,” including the timing and pace of asset sales versus interest rate hikes.