Despite the buzz about Janet Yellen being selected to head the Fed, so far the gold and silver markets are unimpressed. Over the months leading us to Obama’s selection, there was much speculation that a Yellen appointment would fillip gold and silver prices, but that was not the case.
Prices were expected to rise because Yellen is perceived as being a “dove” on inflation, being less concerned about inflation than employment, which means that the Fed under Yellen would be expected to continue quantitative easing until either employment improves or higher inflation rates become reality.
With prices not responding, it looks as if gold and silver will continue to either build bases or test lower support levels. Dan Norcini, commentator KingWorldNews.com’s Weekly Metals Wrap, seems to think that a test of lower prices is a possibility.
Readers with long-term physicals positions should not attempt to trade such action. There is a real possibility that prices will not go substantially lower, and if they do, there is the possibility that a recovery could come with such rapidity that investors could not re-enter the market at favorable prices.
With Yellen’s nomination, conditions remain ripe for continued quantitative easing, and for big price inflation in the near future.
Janet Yellen was sucked out of academia where only theories about how the economy should work are discussed, not the devastating results of past Fed policies. Since the Fed’s inception, now one hundred years ago, the dollar has lost 95 percent (if not more) of its purchasing power and the US has suffered “economic dislocations,” such as the Great Depression and numerous recessions that the Fed was supposed to prevent.
Further, of utmost importance is that the Federal Reserve System is a central bank, conceived by bankers for the benefit of banks. All the hoopla about the Fed having a “dual mandate” of managing money and credit to achieve maximum employment and stable prices is nothing more than a ruse to conceal what the Fed really does, which is print money for the benefit of the banks.
For the banks, Janet Yellen is the right person, in the right position, at the right time. Just about the same can be said for gold and silver investors.
Bill, this is very frustrating to try to understand.
For example, Peter Hug at Kitco, rightly or wrongly, seems to come to the opposite conclusion from you, at least for the short term. See http://www.kitco.com/ind/Hug/2013-11-20-Zero-Rates-For-Perpetuity.html . “In this scenario, cash becomes king and until the polices create relevant inflation, commodities are second tier choices to those chasing yield.”
So… how much longer do we have to wait (all the time while watching metals fall in price) “…until the polices create relevant inflation”? I used to think we were already solidly in that stage during this last decade or so, while gold, silver, and platinum were rising rapidly in price. But now I’m supposed to believe that this stage hasn’t even started yet??