On the heels of today’s Fed release, the price of gold spiked. Here is the harsh reality post-Fed decision.
Gold Breaking Out Today
King World News: The price of gold surged strongly today, breaking out above the critical $1,730 level. Here is a look at the gold ETF GLD, which is advancing toward the recent high.
While it’s important to see follow through tomorrow and Friday, the gold market is looking like it may attack and take out the high of this year’s surge.
Regarding The Fed’s Harsh Reality
June 10 (King World News) – Peter Boockvar: They continue to rationalize QE4 (although they haven’t called it that yet) by saying it will help “sustain smooth market functioning.” I was aware of problems in the market back in March but certainly not now. It is thus officially QE regardless of what the Fed wants to call it. This will continue according to the statement. With respect to the fed funds rate, it will remain at zero “until it is confident that the economy has weathered recent events and is on track to achieve its maximum employment and price stability goals.” Bottom line, nothing really new here but I do want to hear more from Chair Powell on the QE side as I’m not clear on what’s being accomplished right now by an ever increasing size of their balance sheet.
I do want to add that the Fed included in this meeting their economic and rate projections out to 2022. I didn’t initially write about it because it’s really useless information as forecasting out past 3 months is hard enough. That said, both the bond market and the stock market are picking up on the fact that the median forecast for the fed funds rate is zero as far as the eye can see (thru 2022). The Fed seems intent on repeating the experiment of the 7 yr time frame at zero under Bernanke and Yellen and what the BoJ and ECB have been conducting for many years. This in addition to not pulling back at all their QE intentions.
My bottom line is this, it was hard enough for the Fed to get the fed funds rate from zero to 2.5% and shrink their balance sheet from about $4.5T to $3.75T a few years ago. Now I’d argue that it will be almost impossible to get anywhere close to those levels in the many years to come even if they wanted to because of the even greater dependency the markets have on them.
Did You Miss Kirkland Lake Gold’s 50-Fold Share Price Increase?
Kirkland Lake Gold Skyrocketed From $1 To Over $50!
Two Billionaires Just Bought Huge Stakes In The Next Kirkland Lake Gold!
To find out which company two billionaires just bought huge stakes in what they believe will be the next Kirkland Lake Gold click here.
***Also Released: Fed Decision On Interest Rates, But Look At This… CLICK HERE.
***To listen to Rob Arnott discuss what he expects to see for the rest of 2020 in global markets click here or on the image below.
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