By now everyone is familiar with Ben Bernanke and his money printing strategies for solving an economy in crisis. His ideals concerning increasing the money supply stem from his research on the Great Depression where he feels that a low money supply is what hindered the economy at the time. While no one can say for sure if today’s overly-active printing presses have avoided a depression, it has certainly been a controversial policy. With the recent announcement of QE3 many are worried that a slew of open-ended asset purchasing and printing will only debase the dollar further and make it harder to get out of our massive debts [for mroe economic news and analysis subscribe to our free newsletter].
This very issue is one of the key reasons that a number of analysts and experts are putting so much weight on the upcoming election. If Mitt Romney is elected, he has been very vocal about the fact that Bernanke will not serve another term, despite recommendations from Romney’s own party to keep Helicopter Ben in place. This may provide some relief to right-wing voters, but not everyone is so sure that this will fix the problem. Marc Faber, also known as “Dr. Doom”, feels that the next Fed Chairman will be no different than Mr. Bernanke.
“Bernanke is a money printer and, believe me, if Romney wins the election the next Fed Chairman will also be a money printer” he told Bloomberg TV. If the next Chairman is anything like Bernanke, then we can expect trillions in printing and probably a few more QE programs to go along with that, though it may not reach the QE18 that Faber once predicted. But this statement also helps justify his investment in everyone’s favorite commodity; gold [see also Global Easing: The Perfect Storm for Gold].
Faber stated that he will continue to own gold for as long as we have people like Bernanke at the Fed. That means he plans on owning the precious metal for quite some time, given his prediction of the behaviors of future Chairmen. That makes funds like the SPDR Gold Trust (GLD) popular allocations for many investors, as Faber is certainly not alone in his theories of gold being a hedge against the inflation that QE will eventually bring. In 2012 alone, this physically-backed gold fund brought in nearly $4 billion in total assets, proving that there are many others who buy into Faber’s prediction.
Disclosure: No positions at time of writing.