The era
of extraordinary monetary policy is now coming to a close, and with good reason, as economies have significantly recovered since the days of the Great Recession.
Extraordinary monetary policy measures were taken in the heat of the financial crisis, and continue to be applied five years later, as a necessary part of restoring economic growth and stability.
Luke first became bullish on gold and other natural resource back in 2002, following a sharp decline in the value of the U.S. dollar and taking notice of
extraordinary monetary policies in Asian countries at the time.
Fourth,
even extraordinary monetary policy may not work, as the Fed tries to target lending markets, and finds that they can absorb bad assets, but can't readily recycle them.
As a result, we think Japan may be the only economy to still maintain
an extraordinary monetary policy throughout 2018.
The European Central Bank (ECB) and the Bank of England (BOE) have already started moving away from
the extraordinary monetary policies they've had in place in recent years.
This month's Investment Outlook reflects our view that given the strong growth in the U.S. and global economies,
the extraordinary monetary policies previously undertaken by the Federal Reserve (Fed) and other major global central banks are becoming less necessary.
We've had five years of
extraordinary monetary policy; if the next five years look more ordinary (say, 10 year rates back to their normal 3 - 4 % range), there's likely to be a «repricing» of assets, possibly dramatic, surely erratic.