Ben Bernanke, the chairman of the Federal Reserve, was in Jackson Hole, Wyoming on Friday discussing the intentions of the Fed to help the faltering US economy. Still undecided about another round of quantitative easing, Bernanke did not announce bond buying by the Fed to stimulate the economy, nor did he rule it out.
Labeled QE3 as it will be the third round of easing over the past few years, the idea of easing is to boost the economy by pumping it up with cash and keeping interest rates low so that more people will be willing to take out loans to buy homes and cars.
Although it is not clear if the economy will react the same way to QE3 as it did to QE1 and QE2, here are some ideas in how investors should react to the implementation of QE3 if it should happen.
Precious metals and commodities are usually a good bet when the economy is stimulated with cash or when inflation looms in the picture.
"QE3 will likely have a play for everyone," the analysts wrote. "Odds-followers should buy silver. Contrarians should look hard at owning detested coal stocks. And for those who want to participate in a QE3 rally, but with less volatility, buy gold."
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