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As anticipated, quantitative easing (QE) has caused the monetary base -- i.e. total currency circulating in the public plus bank reserves -- to grow astronomically. From under $1 trillion prior to the 2008 crash, the monetary base now stands at about $3.6 trillion and continues to grow by at least $85 billion per month. Gold had mostly kept pace until this year. At the point where both the monetary base and gold had a bit more than doubled, the monetary base took off to the upside with QE4 while gold slumped from almost $1900 to $1200. Gold was driven down by continued proclamations from the Federal Reserve that quantitative easing was on the verge of ending at any moment, although that never actually materialized. In fact, with foreigners buying less American debt than ever and Baby Boomers beginning to liquidate their retirement accounts, the Federal Reserve has become the buyer of last resort.

So as long as the American government continues its massive deficits, which are only projected to grow ever larger with entitlement obligations to retiring Baby Boomers plus now Obamacare, then the Fed must continue monetizing that debt. Even if the Fed were able to pause on QE for a short time, there's no possible way that the monetary base can shrink, as that would entail the Fed trying to sell Treasury bonds in competition with the Treasury itself! As already discussed, the Treasury can't even find enough buyers in the market as it is. Interest rates would have to skyrocket to be able to sell into an environment where the Fed is not only no longer buying, but also selling. That obviously can't be allowed to happen, as the American government cannot afford to service a $17+ trillion debt at interest rates much above those of today (nearly zero). So the monetary base is not shrinking and it is most likely going to keep growing exponentially. And since gold is priced in dollars and tracks monetary growth so closely, gold is most likely going to shoot up to at least $2100 per ounce in the short term just to catch up to where it should have been. And as the monetary base grows, gold should continue to track it, short of temporary fluctuations caused by Fed jawboning.

That sets us up for an incredible opportunity at current prices. I highly recommend signing up for a BullionVault account right now and loading up on as much as you can afford in their Swiss vault (or Singapore or Toronto). You will probably never ever see gold this cheap again and will kick yourself for not taking advantage of this opportunity. As this global financial collapse progresses and fiat currencies go down the proverbial drain, physical gold and silver in your possession or in a responsible vault in a safe jurisdiction will be your only insurance and protection. Even if you can't afford to invest in much right now, you can easily set up a monthly BullionVault savings plan to buy as little as a gram at a time. And every little bit helps.