“Unch”: Gold & Silver Shrug Off The Fed’s November FOMC Statement

Gold & silver shrug the whole lot of nothing coming out of the Fed. The stock market, on the other hand, is not having a good time dealing with it…

Gold & silver were already hit early in the morning, beginning at 8:23 a.m. EST:

Gold clawed its way back to $1225, but silver has languished most of the day in the low $14.40s as we neared the two o’clock hour.

The CME Group was showing an over 90% probability that the Fed would hold rates where they are:

Rates are currently in a range between 2.0% and 2.25%.

The Fed has just release its statement, and sure enough, rates have been left unchanged:

Information received since the Federal Open Market Committee met in September indicates that the labor market has continued to strengthen and that economic activity has been rising at a strong rate. Job gains have been strong, on average, in recent months, and the unemployment rate has declined. Household spending has continued to grow strongly, while growth of business fixed investment has moderated from its rapid pace earlier in the year. On a 12-month basis, both overall inflation and inflation for items other than food and energy remain near 2 percent. Indicators of longer-term inflation expectations are little changed, on balance.

Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee expects that further gradual increases in the target range for the federal funds rate will be consistent with sustained expansion of economic activity, strong labor market conditions, and inflation near the Committee’s symmetric 2 percent objective over the medium term. Risks to the economic outlook appear roughly balanced.

In view of realized and expected labor market conditions and inflation, the Committee decided to maintain the target range for the federal funds rate at 2 to 2-1/4 percent.

In determining the timing and size of future adjustments to the target range for the federal funds rate, the Committee will assess realized and expected economic conditions relative to its maximum employment objective and its symmetric 2 percent inflation objective. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments.

Voting for the FOMC monetary policy action were: Jerome H. Powell, Chairman; John C. Williams, Vice Chairman; Thomas I. Barkin; Raphael W. Bostic; Lael Brainard; Richard H. Clarida; Mary C. Daly; Loretta J. Mester; and Randal K. Quarles.

Implementation Note issued November 8, 2018

This statement will surely be interpreted as “hawkish”.

Pop quiz: How many derivatives of the word “strong” can you spot in the first paragraph?

I spot three: Strengthen, strong and strongly.

The point there is to show why, in part, this will be considered a “hawkish” statement. Of course, the Fed is free to “hike” rates any time it wants to, so really for the Fed to be hawkish, it would simply hike rates.

But the alternative media’s voice is small, and the Fed propagandists get both the microphone and the podium, and so the world is left with the impression of a hawkish Fed.

Here’s a look at the red-line, which tracks the changes in the statement from one month to the next:

Not a whole lot of change there.

Call it a wash.

Add a phrase with the word “strongly”, and take out a phrase with the word “strongly”. One things gets slightly better (unemployment), while another thing gets slightly worse (business fixed investment).

One big, fat, ugly nothing.

What a sham.

Here’s a look at the knee-jerk reaction in gold, silver, and the dollar:

Not a whole lot there either.

Today’s knee-jerk included head-fakes. Gold & silver head-faked higher while the dollar head-faked lower, and the knee-jerk ended up being a pop in the dollar and a slight drop in gold & silver.

Really, the knee-jerk is negligible in gold & silver because the metals didn’t drop to their lows of the day, but the dollar did knee-jerk to its highs of the day. Recall also that the knee-jerk move is not always the actual direction of the move. The knee-jerk can also take time to work itself out.

Interestingly, thirty minutes in, the stock market is not lovin’ it:

And to think the Dow was having a good day.

Zooming in, we can see the drop of nearly 200 points from intra-day peak to intra-day trough:

Buy the dip?

We’ll know soon enough.

Stack accordingly…

– Half Dollar


 

About the Author

U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.

Paul’s free book Gold & Silver 2.0: Tales from the Crypto can be found in the usual places like Amazon, Apple iBooks & Google Play, or online at PaulEberhart.com. Paul’s Twitter is @Paul_Eberhart.

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