The Fed Panics And Gold Soars

The comments below are an edited and abridged synopsis of an article by Dave Kranzler

First it was the convening of the Working Group on Financial Markets—the Plunge Protection Team. This was followed by a speech from Fed Chair Jerome Powell, hinting that the Fed would walk away from rate hikes.

The Fed Panics And Gold Soars | BullionBuzz

Then it was the The Wall Street Journal suggesting that the Fed was considering curtailing the FOMC’s balance sheet Weight Watchers program. The terminology used to describe the Fed’s actions is Orwellian vernacular. ‘Reserve levels,’ as in “leaving more reserves on the Fed’s balance sheet” sounds mundane. This is simply the amount of money the Fed printed and will leave in the financial system, or risk crashing the stock market.

Kranzler suggested in the January 13 issue of the Short Seller’s Journal that the Fed would likely halt QT: “The economy is headed toward a severe recession. I’m certain the key officials at the Fed and White House are aware of this (perhaps not Trump but some of his advisors). I suspect that the Fed’s monetary policy will be reversed in 2019. They’ll first announce halting QT. That should be bad news because of the implications but the hedge fund algos and retail day-trader zombies will buy that announcement. We will sell into that spike.”

Little did he realize that the assertion would be validated just two weeks later. When this fails to re-stimulate economic activity, the Fed will eventually resume printing money.  Ultimately the market will figure out that it’s a bad thing that the only thing holding up the stock market is the Fed.

The policy reversal by the Fed reflects panic at the Fed. Nothing reflects Fed panic better than the rising price of gold.

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