Gold got smacked hard last Thursday.

The precious metal dropped $22 an ounce right after the Federal Open Market Committee (FOMC) released its minutes for last month’s meeting. It fell another $25 in overnight trading.

It seems a few members of the Fed thought that if everything worked out, they might be able to ease off the quantitative easing (QE) gas pedal sometime later this year.

[ad#Google Adsense 336×280-IA]Now that’s funny…

I guess some people can’t take a joke.

Instead of laughing, some people sold their gold…

They’re thinking that if the Fed is serious about stopping all the QE, there will be less inflationary pressure and fewer reasons to own gold.

But here’s the thing…

Fed members talking about cutting back on QE is like senators and congresspersons talking about cutting the deficit.

It’s not going to happen. They can talk about it. And all that debate makes for fun political theater. But once a country starts down the road of debt monetization, it doesn’t turn back… ever.

Sure, the Fed can set targets – like 6.5% unemployment, 2% inflation, or some acceptable rate of economic growth – for when it’s time to ease off the QE accelerator. But it’s just a show to convince the masses that the Fed knows what it’s doing and is in control of the situation. Just like the show Congress puts on whenever the issue of “spending cuts” is put on the table. Yet, the national debt time-bomb just keeps ticking away.

And the QE pedal will remain pressed to the floor.

Congress is going to continue spending money it doesn’t have… The Treasury is going to continue issuing bonds to borrow the money to pay for the deficit spending… The Fed is going to continue printing money to buy the bonds the Treasury issues to keep interest rates low… And all that new money is going to continue pushing down the value of the dollar and pushing up the price of gold.

Now, consider that the central banks of Europe and Japan are doing the exact same thing, and ask yourself if it makes more sense to sell gold or to buy it.

Take a look at the following chart…

At just over $1,650 per ounce, gold is resting right on its longer-term support line going all the way back to January 2011. There’s additional support just below at $1,620, followed by even more support at $1,550.

Last week’s drop in the gold price looks like a good buying opportunity for the metal – especially if you missed the chance to buy it the last time it was down at this level.

Best regards and good trading,

Jeff Clark

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Source: The Growth Stock Wire