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The Fed to Cut QE3 in Q4




According to Bloomberg.com's May 1st news article, the Fed is going to cut QE to 50 billion dollars from the current 85 billion dollars. This way, the monthly bond-buying program will get slashed by over 41 %.

While the US economy is showing signs of improvement, the Japanese and EU economies are reflecting more and more signs of weakness. On the back of the Japanese yen's inflationary course, the dollar can only gain. Likewise, anything negatively affecting the euro will propel the US currency higher.

Economists and analysts are predicting a QE slash of around 50-60 billion dollars, but further cuts may follow later.

The reduction of money-printing by the Fed will inevitably push precious metal prices down.

We've already seen the first step of the gold crash process in mid-April this year. It's highly likely that will see more sell-offs leading to a cascade-like fall of precious metal prices.

The May 1st Washington DC meeting of the FOMC will end with a statement that will give us hints on what the Fed might decide later.

Earlier this year, Prime Values reported about the possibility of the QE trimming to occur even before than Q4 of this year - the QE reduction might happen as early as this summer, when many of the markets' actors are "asleep".

QE4 may not happen for a longer period of time, if the Fed decides to halt QE3 (which is the current monthly bond-buying program). Some analysts expect the Fed to even halt monthly QE until the first half of 2014.





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