Fed Taper Would Be Big Surprise for Gold: Hoffman

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Dec. 18 (Bloomberg) -- Bloomberg's Scarlet Fu and Bloomberg Industries’ Kenneth Hoffman put futures in focus with a look at the gold market in "On The Markets" on Bloomberg Television's "In The Loop."

People want to see inflation at because gold acts against a hedge against inflation.

You have seen the fed turn more and more concern about disinflation.

That is what the gold bugs want.

I must say, the economists polled by bloomberg, they don't see any taper today.

We have a chat room this morning that was quiet until one person put in the chat, what do you think about the taper?

It lit up with a million answers.

Does anybody on this board believe there will be a taper today?

It was 50 nose in a row -- no's in a row saying, there will be no taper.

I think it would surprise the gold market if there was a taper.

It is going to be very interesting to see.

If the fed does taper, that means the economy is heating up.

In essence, that is pretty good for the bulls.

That would provide inflation at the end of the day.

It will be interesting to see the knee-jerk reaction.

What happens today, according to the people in the chat room, gold will go a bit lower.

What it will be a month or year from now.

That means the economy is getting better, right?

You have a chart for us.

What does it show you?

What is really interesting about this is that qe1 and qe2 -- the debts that the federal reserve bought.

Gold went up.

The fed is putting a lot of money into the market.

In qe3, the reverse happened.

Even though it was the biggest buy of government and mortgage securities, gold went down pretty much the entire time.

It gets back to the fact of -- is the fed worried more about inflation or about the economy picking up?

If inflation does go up, that would be a sign that the economy is improving -- or at least that is what a lot of people are pushing toward.

If the focus on the taper is really what is driving everybody, what else could or should traders and investors be looking at as a sidebar concern?

One of the things we talk about, once we get through tapering, we understand what the fed is going to be doing.

Quite honestly, even though they are talking about transparency, the markets do not seem to understand.

Once we understand what the new fed is going to do, then the focus goes on global inflation, what is going on in china, india , is europe actually seeing a recovery?

I think the market will focus away from the fed and more on the rest of the world.

Back to the fundamentals then.


This text has been automatically generated. It may not be 100% accurate.


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