gold, page-49432

The introduction of revolutionary tool QE has obscured Economics 101 I suspect.

The ability of Feds to artificially push down bond rates thereby repricing loan rates is the issue but I can understand why they would do that, economic recovery. The cost at the time was a rapidly expanding debt to the nation but an asset to the Feds balance sheet. Reserve ccy status allowed them this privilege.

I am clueless how US/Feds can reduce that expanding debt although I am aware that new bond issues simply roll over existing incumbent principal debt and the confidence in this ability will highly dependent upon US being the super power militarily/financially.

Technically on the chart, not since Lehman moment have we experience such a massive monthly sell off in 2018 (Oct & Dec). I though there was a message from that volatility but the recovery was/is just as amazing! One of Schiff's argument from the bond yield/IR perspective did demonstrate the impact of a programmed higher rates + bond asset reduction on the fragile US economy and thus measured by the stock market sell off. We also experience this effect in 2015 'taper tantrums' as Bernanke started winding down QE to zero buying completely. I remember it well and the Trump victory and tax stimulus gave the stock market a further kick on recovery + growth right into Jan 2018 as bond yields was seeking that magic 3% on top of the aggressive trade war!

I reckon from my observation of GFC and Feds accommodation policies, trade deal win-win conclusion will give equity markets another good kick up with Feds inactivity in the bond reduction/IR hike programs.

How do you think if this hypothetical setup materialise on the gold direction? By looking at the LT trends, I can make a case for gold favoring both higher and lower IR. Currently favoring a lower bond yields. In addition, gold has been in a range since 2016 so this correlation could also be suspect besides the swing on gold price.

What is your opinion?