Saturday, December 21, 2013

The Fed Taper

The Fed 'finally' taper to the tune of $10 billion. Many economists now think that they will continue to taper and end QE in 2014. In my opinion, this is impossible. Technically, they may end "QE" but they will start another program with another name. The money-printing still goes on. Many think the Fed's policies are about improving the economy, but that's not the priority at all. It's about the bond market. It's about propping the government and big financial institutions up. As I mentioned before, the Fed will use the "low" inflation rate and the unemployment rate as an excuse to continue printing. Ben did exactly this in his press conference 3 days ago. I suspect they will continue to tout the "low" inflation rate and unsatisfactory unemployment rate as an excuse in future meetings. As I've mentioned before, the Fed may start to taper but the pain will be too great further down the road, and they will be back with more QE again. Ben emphasized that monetary policy will continue to be highly accommodative till 2015. Interest rate will remain at rock-bottom zero. First, it was 2013. Then it was 2014. Now it's 2015. What next? Will Ben really taper come January? That remains to be seen.

Friday, December 13, 2013

2014 Gold outlook

Gold has had a good 12-year run in its cyclical bull market. 2013 seems to be a down year. This is of course, very normal in all asset classes during a bull run. As Jim Rogers said, the anomaly was that gold went through 12 years without a down year.

I suspect that gold will continue to go sideways or down in the next few months or maybe through 2014. This will be great for me as I continue to pool income each month and buy the metals up. Hopefully the prices go down enough by the next coin fair in Singapore. I hope to secure myself a North Korean gold coin.

The Indian politicians are trying hard to prevent their citizens from buying gold, and they may even succeed in making them sell gold. If this happens, it is likely that gold will go down a lot. Who knows how much lower it will go to? Many, many gold believers will give up and sell their gold. 

I welcome and love this from a long-term investment point of view. The fundamentals for gold have not changed since the time I bought my first oz at around US$950 and my silver at around US$14. In fact, the fundamentals have gotten better. With all these crazy currency debasements around the world, gold and silver will go up tremendously after this period of correction.
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