Chart of the Day: NY Spot Gold and Commodities Respond To Fed Money Printing

The Federal Reserve is attempting to reflate the US economy to close the output gap and create jobs. They have decided to purchase medium-term Treasury paper to do so. But monetary policy is a blunt instrument. QE is already having all sorts of unintended consequences, the first of which was a big sell-off on the long end of the Treasury curve.  The second was an almost instantaneous negative reaction by emerging market policy makers. The third I have noted is the rise in the price of gold as US dollar currency revulsion takes hold.

The chart below shows gold up to 1378 already today. That’s actually $40 or 3 percent from yesterday.

Source: Kitco

And gold is not the only commodity vaulting higher. All energy and agricultural commodities are up as well. Inflation here will pass through to consumers as a regressive tax via food and energy prices.

Source: Bloomberg

But everything is up. The Fed is getting what it wants too: asset price inflation. Stock futures are up.

Source: CNN

The asset-based economy is alive and well.