This is a brief but very important change to my previous post of July 18, 2019, "U.S. Dollar Stronger For Longer".

Fed's new QE to Push US$ down and Gold up.

If it looks like a duck, walks like a duck and quacks like a duck it is probably a duck. Thus despite the protestations to the contrary by Chairman Powell, last week's announcement that the Fed that it intends to buy $60 billion of bills per month until mid-2020, certainly is QE on a massive scale. As such, the total monetary base should rise by almost half a trillion dollars to $3.76 trillion by June 30, 2020.

(Click on image to enlarge)

Chart by the Author from Federal Reserve Data.

The consequence of this should be a decline in the U.S. dollar which should please Mr. Trump and U.S. exports. However, it could also result in a rise in imported inflation.

(Click on image to enlarge)

This should push the price of gold back to its equilibrium level with the AWMB which stands at US$ 1,900 per ounce but should be higher at possibly US2,000 per ounce by mid-2020 as excess reserves continue to move out into the real economy.

(Click on image to enlarge)

Chart by the Author from Federal Reserve Data