Saturday, October 21, 2017

Gold's short and medium term future could rest on how becomes appointed as the new Fed Chief

One of the most non-secret secrets in the financial sphere is how the Federal Reserve, along with the majority of other central banks, having a trading desk that allows them to dabble in stocks, futures, derivatives, and commodities whenever they choose to do so.  And when you add in their purchases of Mortgage Backed Securities (MBS) from the banks immediately after the 2008 financial crisis, then you realize that the central banks have manifested Thomas Jefferson's nightmare of being able to buy and own a lion's share of the assets of a nation.

And with money simply printed out of thin air.

"I believe that banking institutions are more dangerous to our liberties than standing armies,"  Jefferson wrote. " If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around(these banks) will deprive the people of all property until their children wake up homeless on the continent their fathers conquered." - Thomas Jefferson
This is why the upcoming decision by President Donald Trump on who will likely replace Janet Yellen in the seat of Chairman of the Federal Reserve is one of the biggest factors for how bonds, equities, and especially gold and silver, will perform in the coming months because today's markets are not run by fundamentals and technicals, but by interventions from the central bank.

A five-way race for the new Federal Reserve Chair has recently narrowed to two, with reports circulating that Fed governor Jerome Powell and Stanford University economist John Taylor are vying for the top economic position in the country. 
According to reports from the White House, President Donald Trump could announce his nominee early next week. He said that he would release his pick before he goes on a tour in Asia in early November. 
There has been a wide range of speculation on who will lead the central bank for the next four years. The contenders included current chairwoman Janet Yellen; the president’s chief economic adviser, Gary Cohn; and, Kevin Warsh, a former Fed governor and Morgan Stanley banker. 
The question is who would be the best for gold and according to some analysts, it could be Powell, who is seen as a moderate central banker and would likely continue the central bank’s gradual pace of interest rate hikes. 
To some analysts, Taylor is seen as a monetary policy hawk and would be the worst for gold investors as he could support a faster pace of rate hikes. 
Higher interest rates would be bullish for the U.S. dollar and push bond yields higher, which would be negative for gold, which is a non-yielding asset. - Kitco
Until things change, the premise remains the same... Investors can't fight the Fed.

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