Fed Up Friday: Gold Still Strong Investment, Regardless of FOMC Direction

Fed Up Friday: Gold Still Strong Investment, Regardless of FOMC Direction

This week marked the full release of the 2011 FOMC transcripts, revealing troubling details from the meeting notes. As the Federal Reserve looks to see a big shakeup in 2017, gold is looking at a win-win situation. Learn more in this week’s Fed Up Friday.

Three Elements that will Stir Up the Fed in 2017

Trump’s administration represents a changing of the guard in Washington, and the Fed is not immune. Out of everything expected, a few key changes will really shake things up for the FOMC. First, in 2017 we’ll be getting 3 new voting members. Their records seem to lean more dovish than the counterparts they’ll be replacing, which may influence the number of rate hikes for 2017.

Second, the Fed’s plan shows that they don’t feel the need for fiscal policy to achieve their monetary goals. From their perspective, the nation has reached peak employment – (regardless of how many are actually underemployed) – and fewer barriers are in their way to increase inflation.

Finally, Trump will be selecting new members to fill two vacant slots on the Fed Reserve Board. That and Yellen’s term expiring in early 2018 should be the big moves for building a new monetary regime.

Fed Up Friday

Gold will be Strong Insurance regardless of Fed’s Policy

According to Newsmax, there are two likely routes the Fed will take this year, and either direction results in a net positive for gold. The first is a loose monetary policy, which when paired with Trump’s fiscal plans would likely result in an inflationary environment. Historically, inflation is a healthy environment for gold to increase in value.

Janet Yellen has expressed openness for negative interest rates in times of economic downturn, which are another net positive environment for buying gold. It seems like a safe bet in this potentially tumultuous year.

Potential Trump Picks for Fed President would Push for Tougher Policy

Many see three men as potentials for Trump’s Fed Chair: Glenn Hubbard, John Taylor and Kevin Warsh. According to Bloomberg, all three were former Bush appointees who spoke at the annual American Economic Association meeting last week.

All three men are pro raising rates and see the Fed as lagging behind. All three feel that the economy has relied too heavily on the Fed, and see Trump’s new fiscal stimulus plans as a better way to bolster the economy.

FOMC 2011 Transcripts Reveal Plan to Interfere in Politics

The Fed releases all private transcripts five years after they happen initially, and the start of this year marks the release of their 2011 notes. Five years ago, the debt ceiling was the issue of the moment, and congress was battling Obama on raising it. In the revealed transcripts from the days of Chairman Bernanke, the Fed was dipping its hands into politics far to much to claim “neutrality”.

In their transcripts, the Fed’s senior members planned to stick their hands into the political realm and delay the inevitable reality that our national debt had gotten out of hand. Their plan was to pay for certain debts and not others if the debt ceiling issue wasn’t resolved, a plan the Treasury Secretary at the time called “unwise, unworkable, unacceptably risky, and unfair to the American people.”

Sharing is caring!

Author Image

Peter Schiff

Mr. Schiff began his investment career as a financial consultant with Shearson Lehman Brothers, after having earned a degree in finance and accounting from U.C. Berkeley in 1987. A financial professional for more than twenty years, he joined Euro Pacific in 1996 and served as its President until December 2010, when he became CEO. An expert on money, economic theory, and international investing, he is a highly sought after speaker at conferences and symposia around the world. He served as an economic advisor to the 2008 Ron Paul presidential campaign and ran unsuccessfully for the U.S. Senate in Connecticut in 2010.