“Gold rallied under the nonsense this will be inflationary”

Fed is Trapped – They’ve Injected Tremendous Volatility Into the System

The Fed said that it would continue buying bonds at an $85 billion monthly pace for now, expressing concerns that a sharp rise in borrowing costs in recent months could weigh on the economy. What the Fed is really saying is that behind-the-curtain everyone is screaming that interest rates will rise and that will blow out the deficit. Gold rallied under the nonsense this will be inflationary, when in fact the opposite is necessary to send the deficit soaring out of control. This is why Japan bought government bonds to help keep rates down.

….read more HERE

The Buying in of Long-Term to save banks 2007-2010, Has Now Placed a Time Bomb at the Door

Treasury Secretary Jack Lew made the following statement during remarks today before the Economic Club of Washington D.C.:

“[W]e are relying on investors from all over the world to continue to hold U.S. bonds.  Every Thursday, we roll-over approximately $100 billion in U.S. bills.  If U.S. bond holders decided that they wanted to be repaid rather than continuing to roll-over their investments, we could unexpectedly dissipate our entire cash balance.”

Wonder why the Fed is Boxed-In?

The Federal Reserve’s FOMC statement is out, and it’s a shocker!

The Fed is NOT TAPERING its massive $85 billion large-scale asset purchase program.

Almost no one expected this.

The Dow went from -40 to +63 in the blink of an eye. 

The S&P 500 got as high as 1,718, which is an all-time intraday high. With general expectations focused on a Fed taper of $5-$15 billion, traders raced into stocks in the aftermath of the decision.  

The U.S. dollar tanked, and gold spiked, bonds zoomed driving interest rates down. 

The Fed also issued its economic projections.  FOMC participants now expect GDP to come in between 2% and 2.3% this year, down from 2.3% to 2.6% last time, and the unemployment rate to come in at 7.1% to 7.3%, down one-tenth of a percent on both ends of the range.  Three Fed officials expect the first rate hike to come in 2014, 12 expect it in 2015, and two in 2016.  The central forecast for the 2016 rate path is around 1.75% to 2%.

P.M. Kitco Roundup: Gold Shoots Higher As FOMC Does Not Announce “Tapering”- HERE

Here’s the market action as of 11:55 Pacific Time: