Editorials

Fed Balance Sheet to reach $11 Trillion

The Congressional Budge Office projects the U.S. government plans to have annual deficits above $1 trillion every year for the next ten years.


On the final trading day of 2019 gold futures traded to a high of $1529 and penetrated resistance at $1520. .  According to technical studies by Gary Wagner the next level of resistance is $1540 per ounce. Major resistance resides at the 2019 record high of $1565. Wagner believes gold will take out these three resistance levels by the first quarter of 2020.  His target for a high in 2020 of $1680. 

Financial authority Ed Yardeni believes the stock market is currently overbought.  He sees a 10% to 20% correction in equities in the first quarter 2020.  Well Fargo analysts also see a possible market correction 1Q 2020. 

The Congressional Budget Office projects a $12.2 trillion cumulative deficit in the next ten years.  This would require $102 billion in monthly borrowing by the treasury. To keep the repo market liquid the Federal Reserve is injecting $60 billion per month.  If continued this would be $720 billion a year or $7.2 trillion for ten years. The Fed balance sheet would go from $4 trillion to $11 trillion. The U.S. Government debt would be $34 trillion. 
The price of gold would be projected to be $2000 per ounce in 2030 if gold repeated the last 10 year gain. However, gold is reaching peak production. New discoveries are becoming less prevalent.  Central banks are selling U.S. treasuries and buying more gold. Gold could spike in the next decade.  Gold expert Frank Holmes expects the Federal Reserve to monetize the national deficit and expand the money supply. He projects the price of gold to reach $5000 in the next decade.

© 2016 - 2020 Steve Johnston - All Rights Reserved.
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