More Conflicted Comments From FED

The Market Gage - Dillon Gage's Precious Metals Newsletter

They’re at it again. New York Fed president William Dudley said today, “Gradual path to rate hikes are appropriate. Although the downside risks have diminished since earlier this year, I still judge the balance of risks to my inflation and growth outlooks to be tilted slightly to the downside.”

Janet Yellen also out there speaking to the media said, “The global economy has seen relatively weak growth despite positive signs in the U. S.” The FED has taken a cautious approach on raising interest rates this year after raising them in December, for the first time in nearly a decade. The bank’s policy committee projects two rate hikes this year.”

Yellen, under criticism that the December rate hike came under pressure from Wall Street and the media, defended that decision by saying, “I did not consider the December decision a mistake, as indications at the time showed substantial progress toward the FED’s labor market and inflation goals. Moving forward, the FED will watch very carefully what is happening in the economy.”

It seems to me that there is much disagreement among the ranks of the Federal board. Four of the 17 members now publicly indicated their disagreement with the dovish guidance stance that Janet Yellen is taking.

SO what does this all mean? Is Janet Yellen losing control of her staff and does the staff have any confidence she can lead?

In the end, with all the different opinions each of the FED governors have (and there are many) raising interest rates will be difficult, when parts of the world economies are in shambles and negative interest rates in the news every day. As they claim rate hikes will be data dependent, I expect the data
will justify staying right where we are because we all know the December rate hike WAS a mistake.

For the gold market there is nothing more important than having clarity on where interest rates will go. So in the meantime the price of gold just sits in a trading range and consolidates with hopes of building a strong foundation to support higher prices in the future.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.