But a curious thing happened between 2012 and now: the Fed realized that it could take unlimited amounts of bad debt onto its own balance sheet - and other off balance sheet accounts and thus bail out every major bank, shadow bank, insurance company - or anyone else deemed Too Big To Fail.
And the markets figured this is an excellent thing.
In 2012 gold hit $2000. The markets weren't so sure about this too big too fail thing,
But then they decided - why not? It's working now - who cares about "long term lag effects?" Only doomsaying jerks who miss out on every rally.
Now, 12 years later and gold has only just broken out to new highs. But at 2012 value for the dollar the price would have to be about $2600 to have broken out to a new high. So we still have a ways to go.
Just as a way of seeing what the true value of gold would be today if investors were suspicious of the Fed's ability to control the economy as they were back in 2012 - at the tail end of the Great Economic Crisis.
The thing is the Fed's balance sheet back then had ballooned to about 3 trillion dollars. Whoa! Nobody had heard of such a thing. And the Federal debt had ballooned to nearly 80 percent of GDP.
Scary!
Now, with investors just beginning to get suspicious again of the long term stability of the financial system the Fed's balance sheet if nine trillion dollars and debt is 125 percent of GDP. AND Two trillion dollars of corporate debt borrowed at near ZERO will have to be refinanced at 6,7, 8 percent over the next 20 months! AND we go into an election that may well lead to civil war. While two major hot wars a being fought in Europe and the Middle East! Neither with any solution on the horizon.
And gold has only just broken out. It has to get to about $2600 just to equal its value at its high in 2012 dollars.
So if you're worried you missed the rally. Think again. It's only just begun.
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