Staff Toilets Not Working (A Gold Market Commentary)

For BullionVault I am the only employee outside of head office. But I am still on the all staff email. For which I am very grateful. I get to hear all the comings and goings of the employees as they often bring back treats from the different destinations where they have been on their vacations. I plan myself to bring something special to them when I go to London in December.

Of course I also get some emails that are less important to me such as the air-conditioners not working, the lock on such and such door is not functioning properly and whatnot. But oddly enough yesterday I received an email at about the same time that I was looking to see for the headlines of the report from the FOMC meeting. It just so happened to be so apropos, “Staff toilets not working”.

As I read about the Fed announcement and saw the almost instant reaction from the gold market it came to mind the feeling of shock that the market had from propagating tapering for the last few months. I’m certain that in many of the trading offices the staff toilets broke down after the news.

The news of not tapering though, in all honesty, is not news at all. Fed Chairman Ben Bernanke has been 100% clear about his goals that need to be reached before tapering is begun. However professional economists and talking heads have been propagating another story and talking their own books.

As usual when reality hits many people go into denial and try to blame the chairman for misguiding them. On Bloomberg radio this morning it was all the talk whether the Fed would be trusted or not in the future. In reality the question should have been; should the media and their talking heads be trusted in the future? It was their interpretation not the Fed’s communication that was an error.

At this hour gold and silver remains strong. Gold is currently trading $1371 per ounce having reached a high of $1375. Silver is currently trading $23.16 an ounce having reached a high of $23.42. We’ll gold and silver continue to rally? How long will quantitative easing last? Is the US dollar doomed to lose value no matter what the Fed decision?

With all these questions and no clear answers there is only one thing to do. The investor must search out uncorrelated assets that hold their value with liquidity, and that means gold and silver.-Miguel Perez-Santalla

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