What Is The Link Between Gold And QE? [SPDR Gold Trust (ETF), iShares Silver Trust (ETF)]

gold AAAGold Silver Worlds: The intuitive response on the question what the link is between gold and QE is that QE (or “money printing”) is devaluing money and, consequently, appreciating the value of gold.

That correlation became clear during the first two rounds of QE when the gold price more than doubled in dollar and euro terms in some 3 years and silver went three times higher.

However, QE3 resulted in the opposite effect. The chart shows how prices of key assets (stocks, bonds, commodities, gold) evolved between the start of QE3 and the start of tapering.

QE3 vs asset prices 2012 2013 money currency

Logically, the end of QE3 should be impacting gold in a positive way. The tapering of QE3 is a long process, which, so far, has resulted in a decrease of the bond and mortgage backed securities supply by the US Fed from 85 billion US dollar per month to 25 billion.

  • December 18th 2013: taper 10 billion to 75 billion US dollar per month
  • January 28th 2014: taper 10 billion
  • March 19th 2014: taper 10 billion
  • April 30th 2014: taper 10 billion
  • June 18th 2014: taper 10 billion
  • July 30th 2014: taper 10 billion

The next chart clearly shows how stocks have been suffering as the taper process progressed, while gold has been stable since the start of tapering.

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