Home » Markets » Gold investors call Fed’s inflation bluff
Comments Off on Gold investors call Fed’s inflation bluffMarkets
Gold investors call Fed’s inflation bluff
How will gold react to taper tantrum?
Sprott Asset Management senior managing director Ed Coyne discusses why the Fed is entertaining tapering asset purchasing.
Gold investors are taking the wheel, setting the precious metal up for a major rally as investors realize the Federal Reserve is powerless against rising and persistent inflation, according to one strategist.
The precious metal on Thursday was flirting with a sixth straight day of gains, hovering near $1,800 an ounce. It has rallied 8.5% since touching a nine-month low of $1,677.70 an ounce on March 8.
"Markets are basically preparing for the wrong outcome," said Peter Schiff, CEO and president of Westport, Connecticut-based Euro Pacific Capital.
Schiff says markets are finally starting to come to the conclusion that "inflation is not transitory," and is a problem the Federal Reserve will try to solve with rate hikes and tapering.
FORGET INFLATION – DEFLATION COULD REAR ITS UGLY HEAD SOON
Investors have begun pricing in tighter monetary policy, and therefore a weaker economy, by buying U.S. dollars and Treasurys.
The dollar this week hit a three-month high against a basket of its peers heavily weighted in favor of the euro. This as the 10-year yield fell to 1.25%, or -95 basis points when adjusted for inflation, both of which were the lowest since February.