By Bud Conrad, Casey Research

The Federal Reserve recently announced important policy changes after its Federal Open Market Committee (FOMC) meeting. Here are the three most important takeaways, in its own words:

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John Taylor, the CEO and Chairman of FX Concepts, the world’s largest currency hedge fund, announced that no trader has any purpose betting in favor of the dollar anymore. “Everyone is sure whenever the dollar looks strong, Bernanke will come up with another idea to make it weak,” Taylor said following last week’s announcement by the Federal Reserve to keep interest rates at 0% until 2014. In addition, Taylor predicts QE3, a third balance sheet expansion program by the Fed, will come to fruition sometime in the near future and will do even more damage to the dollar. Read the rest of this entry »

Despite what the media may be reporting, today’s employment gains (243K new jobs, unemployment rate falls to 8.3%) are irrelevant to policymakers. The main reason they are effecting gold and silver today, gold fell about $20 and silver ~$0.60, is because speculators presume the fiscal authorities and the Federal Reserve will need to enact less stimulus given the lower unemployment rate. The reality, however, is less stimulus is not an option for either branch of government. Read the rest of this entry »

Bill Gross, the famed bond manager who runs the world’s largest fund at PIMCO gave some sobering insights in a recent CNBC interview. Read the rest of this entry »

Many think that whether or not the Federal Reserve will raise rates down the line is simply a matter of discretion. Commentators often discuss the “will” of the Fed to focus on inflation and adjust rates accordingly, but what is missed is how the Fed’s hands are actually tied to an inflationary monetary policy for the foreseeable future. Read the rest of this entry »

Last week, in a matter of less than 7 days, the Federal Reserve led by Chairman Ben Bernanke purchased a net of more than $20 billion in new assets. Despite the fact the Fed is now only supposed to be implementing Operation Twist (a move to sell short term Treasuries in exchange for long term ones) and a reinvestment program (the funneling of maturing mortgage-backed securities into Treasuries), the nation’s central bank is quietly embarking on a major quantitative easing program many were expecting would be accompanied by a grandiose announcement. Read the rest of this entry »

Though late to the party as usual, the proverbial man on the street – along with members of mainstream media and Wall Street heavyweights – is finally waking up to the decade-long, 700% increase in the price of gold, joining a growing buzz around the monetary metal. From questions whether gold is in a bubble to predictions that soaring prices are just around the corner, one thing is clear: a new phase of awareness for gold is upon us. How far might it move before these troubling times are over?

Bud Condrad of Casey Research puts together an excellent analysis on the question of whether or not gold is still the answer for investors, despite its already strong, record performance. Read his full article here.

Following declines in European stocks, US equities opened lower today and have extended losses as the day progresses. The Dow, NASDAQ, and S&P 500 are all down more than -2%. Gold has been dragged down into the sell off, likely the result of traders using the metal’s strong liquidity and past performance to acquire cash, falling below $1,700/oz. The only asset on the rise today is Treasury prices and risk-off currencies like dollars, a predictable outcome of a risk sell off as investors flee assets and by necessity enter cash-like products.

Today’s sell off is the culmination of last week’s economic releases, the congressional super-committee’s failures and deterioration in Europe’s financial woes. Let’s review these factors: Read the rest of this entry »

From Cato:

Featuring Rep. Ron Paul (R-TX), Chairman, House Financial Services Subcommittee on Domestic Monetary Policy; James Grant, Editor, Grant’s Interest Rate Observer; Jeffrey M. Lacker, President, Federal Reserve Bank of Richmond; Robert Zoellick, President, World Bank; Allan Meltzer, University Professor of Economics, Carnegie-Mellon University, and Distinguished Visiting Scholar, Hoover Institution; Judy Shelton, Author, Money Meltdown; Benn Steil, Director of International Economics, Council on Foreign Relations; John Allison, Former Chairman and CEO, BB&T, and Distinguished Professor of Practice, Wake Forest University.

CATO’S 29th ANNUAL MONETARY CONFERENCE — MONETARY REFORM IN THE WAKE OF CRISIS — will address the fundamental issue of how to prevent another global financial crisis — not by tinkering with the present government discretionary fiat money regime but by fundamental reform. The first step is to rethink the role of government and central banks in the existing system, and then consider alternatives — such as the gold standard — that would substitute rules for discretion, increase choice in currency, and allow markets to determine the optimal quantity of money. After nearly a century of U.S. central banking, it’s time to reconsider whether the Federal Reserve’s monopoly status, discretion, and growing regulatory powers are more a source of crisis than a cure.

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Marc Faber, publisher Gloom, Boom and Doom Report, talks to Bloomberg news about his views on global equities. Faber predicts that global equities will range trade but will have a bias to the upside in the short term. Equities could rally another 5% or so, according to Faber, and US stocks may continue to outperform Asian and European stocks given the public backstops in the US system. Faber thinks new highs or new lows in equities are very unlikely for the time being. Faber retains a 25% allocation in precious metals, and has said in the past that gold is not in a bubble. See the full video interview (click here if feed does not load the video): Read the rest of this entry »