T he Federal Reserve’s balance sheet is set to exceed a whopping $4 trillion today, prompting warnings its ultra loose monetary policies are inflating asset price bubbles and will lead to a devaluation of the dollar and significant inflation in the coming years.

The Fed’s assets rose to a record $3.99 trillion on December 11, up from $2.82 trillion in September 2012, when it embarked on a third round of bond buying. It’s balance sheet has ballooned by more than $3 trillion or 300% since September 2008 when it was at just $0.91 trillion.

As Low As $1.99 Over Spot!

Today’s AM fix was USD 1,233.25, EUR 896.97 and GBP 754.05 per ounce.

Yesterday’s AM fix was USD 1,237.25, EUR 898.71 and GBP 759.42 per ounce.

Gold fell $10 or 0.81% yesterday, closing at $1,230.70/oz. Silver slipped $0.06 or 0.3% closing at $19.90/oz. Platinum dropped $13.51, or 1%, to $1,348.75/oz and palladium fell $14.78 or 2.1%, to $701.52/oz.

Gold (Black) and the Federal Reserve Balance Sheet (Red) October 2008 to December 11, 2013

Gold, platinum and palladium all gained in London before the U.S. Federal Reserve’s policy statement on a potential taper to its massive debt monetisation program.

The taper caper continues and for the second time in three months, world markets are braced for the possibility of a slight reduction in the size of history’s greatest and most radical monetary experiment.

The Federal Reserve’s open market committee closes its meeting today and decides whether to start to taper the nearly $20 billion per week, or $85 billion per month, it creates each month in order to buy U.S. bonds.

Federal Reserve Balance Sheet and S&P 500 The Financial Times

The Federal Reserve’s balance sheet is set to exceed a whopping $4 trillion today, prompting warnings its ultra loose monetary policies are inflating asset price bubbles and will lead to a devaluation of the dollar and significant inflation in the coming years.

The Fed’s assets rose to a record $3.99 trillion on December 11, up from $2.82 trillion in September 2012, when it embarked on a third round of bond buying. It’s balance sheet has ballooned by more than $3 trillion or 300% since September 2008 when it was at just $0.91 trillion.

The deterioration in the balance sheet of the Fed and most central banks in the world bodes well for gold prices in 2014.

Gold in U.S. Dollars, 30 Days (Bloomberg)

Legendary investor Warren Buffett has described the U.S. Federal Reserve Bank as “the greatest hedge fund in history.” Buffett is underestimating the risks involved in the radical debt monetisation programme which poses serious risks to the dollar, the U.S. economy and the global economy.

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