Today's article is one of my scariest yet; as, after watching events unfold in the world's most notorious geopolitical hotspot in recent weeks, it's difficult to come up, using my best Spock-like logic, with an alternative conclusion to the potentially catastrophic one I'll discuss today. Which, if it occurs, may catalyze not only the financial "big one" we all know is coming, but an era of political, geopolitical, economic, and monetary destabilization unlike; and potentially, unparalleled in its destructive value; anything yet witnessed.

Hong Kong’s central bank has stated that it prefers a stable exchange rate against the dollar. It is not independent of Shanghai and, judging by today’s exchange rate the People’s Bank of China agrees as we see the Yuan virtually unchanged today. This will allow us to see more clearly the differences between the Shanghai gold Exchange prices and London and New York.

In essence, Janet Yellen’s statement showed that the Fed sees a moderately growing U.S. economy that will continue to grow at a moderate pace. No accommodation of President Trumps intended policies was made. The Fed Funds rate after the rise is lower than inflation levels and look like remaining there as the Fed Funds rate, if the economy remains on the path they expect it will. If the economy remains on this path, then by the end of the year, the Fed will begin to reduce its Balance Sheet. It will be a very slow process intended to give markets no stress. As a result equity markets may rise more ignoring institutional worries that they are already too high. It is clear that hopes of a robust economy in the near future are unrealistic. For gold this was overall positive because of low inflation levels.

While the markets continue towards the expectation that there will be a rate hike by the Fed tomorrow, more and more people are saying what we said yesterday, “With Janet Yellen such a cautious person she may well have been disturbed by the poor data of late. While 94% of the market believes a rate hike must come this week, there is room, we believe, for a delay in the rate hike until the data is more positive. If she does, you will see the dollar weaken and perhaps equity indices move too high. We see gold benefitting if this does happen.”