Chart of the Day: Gold reacts to FOMC rate easing

The Fed has come out 9-1 in favor of rate easing i.e. capping medium-term treasury rates. The interesting bit is that while the Fed did the exact same thing in August out to two years, this announcement takes permanent zero out to nearly three years. That’s rate easing. Some people call it financial repression.

And it’s gold bullish.

Also see my August post on when rate easing was first announced and the June 2011 post that explained why rate easing was coming.


While rate easing and its cousin permanent zero might have some salutary effect in the short term, these policies are toxic to the financial sector and consumption demand. Likely, they will not spur the economy but lead to a deepening malaise.

Why Permanent Zero is toxic and leads to depression, Aug 2011

Just sayin’