Wednesday December 18, 2013 14:12
The Fed modestly reduced its bond purchases by $10 billion, but, stressed that its Fed fund target rate was promised to be held at historic lows for the balance of 2014. The first reaction for the metals was a large sell-off, but after analysis, the Fed is still aggressive in the short term, with liquidity and interest rates expected to remain near zero for another year.
It will be difficult in 2014, as the Fed tries to dig itself out of the monetary quagmire caused by massive liquidity injections. At best, the Fed will have no choice but to graduate the pullback on bond buying, while keeping an eye on the bond market, which on the long end has implosion possibilities. Looking at 2014, I suspect when it is over the worst job in the world ranking will be that of the Federal Reserve Chairman (sorry Chairwoman). Yellen actually wants the job. Good thing her hair is already grey.
By Peter Hug
Global Trading Director
Kitco Metals Inc.