Gold initially rallied today on Fed release discussing inflation but the Fed may not like what it sees regarding future inflation.
August 27 (King World News) – Peter Boockvar: Meet the new policy, same as the old policy sang The Who, or something like that 🙂
The statement today said:
“The Committee seeks to achieve inflation that averages 2% over time, and therefore judges that, following periods when inflation has been running persistently below 2%, appropriate monetary policy will likely aim to achieve inflation immediately above 2% for some time.”
You know how I feel about this but he didn’t give any details on what the time frame will be in calculating the ‘average’ as Powell said they are “not tying ourselves to a particular mathematical formula that defines the average” and said they will have a “flexible form of average inflation targeting.”
Powell also said:
“The persistent undershoot of inflation from our 2% longer run objective is a cause for a concern.”
Let’s write this quote this way instead, “The persistent undershoot of one’s cost of living from our 2% longer run objective is a cause for a concern.” Concern? This at a time when unemployment is above 10% and many that are working are living paycheck to paycheck.
Outside of negative rates, the Federal Reserve continues to join the BoJ and ECB in the same policies and hoping for a different result. They have proven to be Intellectually and in practice bankrupt policies.
Gold Reacts, Fed May Not Like What It Sees
Bottom line, there is NOTHING new here to anyone that has read FOMC statements this year. That said, Powell again is just reinforcing the extreme dovishness of the Fed and Treasury yields are moving lower as is the US dollar in response. Gold is rallying close to $2000 and stocks are rising again. So the Fed is willing to risk rising financial stability risks because of the bubbles being inflated over the worries of the lack of inflation for consumers.
I remain confident that in the coming quarters, Powell and Co will get the inflation they want but they won’t like it when they see it. And then things will really get interesting for them and markets.
KWN has now released this week’s an audio interview!
***To listen to the timely audio interview that includes price forecasts for gold and silver for the last few months of 2020 click here or on the image below.
Despite Volatility, Silver To Take Out $30
***ALSO JUST RELEASED: Despite Volatility, Silver’s Next Leg Higher Poised To Take Out $30 CLICK HERE.
***To listen to one of the most powerful audio interviews of 2020 with the man who advised people managing more than $2 trillion click here or on the image below.
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