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Fed Leaves Rates Unchanged. Utopia Trade Continues With Caution

November 4th, 2009
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11.04.2009

Federal Reserve Chairman Ben Bernanke.

Fed Leaves Rates Unchanged. Utopia Trade Continues With Caution

original article written by Net Advisor™


As expected, the U.S. Federal reserve made no changes to interest rates. And the highly watched language of the direction of future rates is thus far, the past equals the future.’

Thus the Fed sees rates near zero for an “extended period.” The market rallied on the news as much as 150 point, then a late day sell off, a “buy on the rumor, sell on the news” took place where the Dow lost 120 points from its intraday gains to close +30 and change.

Concerns over India’s recent gold accumulation and a greater move away from the Dollar should be a concern for the U.S.

India’s central bank just purchased 200 tons of gold on concern that the U.S. and EU economies have “collapsed” according to India’s finance minister’s view. India did not buy this gold at a discount, they paid full market price for it. This is a bold move of swapping paper currencies to hard assets. This trend has been going on all year including with China and Russia and other countries. The World’s largest holder of gold is still the United States.

The “no change” move by the Fed may allow the Utopia Trade continues until further notice. However it is disconcerting that the market has on several recent key occasions have sold off from the highs of the day and fallen lower. Wall Street’s view is as long as money is flowing in from the government and the FED to push the economy higher, so shall stock prices. The question is, what happens when the music (money) stops?

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