Many like myself were wrong. The ending of QE should have sent the equity markets plunging, because I, like others believed the only reason markets were rising was due to QE. Didn’t happen. DOW way up today and gold smashed. WTF does the market know I just am not getting? It seems to be able to hold itself on its own legs, just as the US an Europe are being economically hollowed out.
The Fed's continued adherence to ZIRP remains a bright spot for gold prices. A significant rise in interest rates would have tanked the price of gold.
Couple of thoughts
1: Although QE may be ending, ZIRP is most certainly not. I believe (that being meaningless) that we have very low rates (measured against historical stds) for a long time. A very long time.
2: This again is weakish reasoning, but there really is no other place to put money, and there are plenty of Europeans chasing both the rising US market *and* the strengthening USD. You can get 2-3-4% in US stocks which, yes, have price risk, but are the best damned companies on the face of the earth. They just are. They are not junk! You get their management, their infrastructure. Their market share. (Do not mistake me for a permabull!) There is no other place to go.
3: And now, if rates are scheduled to rise, that should be the nail in the coffin for bond investors, no? Incidentally, bond shorts have been destroyed 15 times over during the last 4 years.
4: IMO the influence of QE was absolutely foundational to the performance of the stk market over the past few years, and thus the thought the removal of same would knock the stuffing out of the market is perhaps logical. But the same people who have been the prime beneficiaries of Fed largesse understand VERY WELL that if things get stinky, the Fed will be RIGHT BACK.
Did we not just see that? We had a 10% pullback and the market recovered in TWO WEEKS??
Why, that’s perfectly normal, isn’t it? /s
Gold stocks just brutalized. Not just bad earns, but a severe drop in spot.