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The European Central Bank’s (ECB) balance sheet continues to expand with the central bank gobbling up assets at a record pace under its pandemic emergency purchase program. 

The central bank’s balance sheet has expanded to more than €6.5 trillion for the first time on record. “Total assets rose by another €27.8 billion last week, most since July, on QE and the balance sheet now equal to 63.6% of Eurozone GDP vs. Fed’s 36.3% and BoJ’s 135.3%,” popular analyst Holger Zschaepitz noted on Monday. 

The unprecedented balance sheet expansion is bullish for scarce inflation-hedges like gold. 

The so-called Cantillon effect states that the first beneficiaries of the uneven expansion of money supply are banks and institutional investors, who typically put the money into stocks, real assets. As such, the ECB’s balance sheet expansion is also favorable for stocks.