Considering gold's recent correlation with risk assets, its traditional connotation as a safe haven has really not dictated its price action in recent months. However, the fact that gold is unencumbered by the counter-party risk that is pervasive amongst traditional asset classes means that this safe haven classification cannot be unilaterally compromised in the long-term. While short-term trading patterns in gold may have adopted a transient correlation with risk assets, any one of a number of different catalysts could erode investor confidence in conventional investments and trigger a flight to quality that should ultimately benefit gold.

The cause and time frame for this paradigm shift in risk tolerance are uncertain, but the characteristics that have afforded gold its monetary connotation over thousands of years will not be fundamentally changed by a few years of counterintuitive trade. This consideration is important because along with gold, the Japanese yen has historically been

There is an ongoing drama that warrants more attention than the media has afforded it. European policymakers are amidst negotiations regarding the scope and execution of an impending bailout for Cyprus -- the eurozone's fifth bailout. While the fact that yet another European nation needs a bailout is important in its own right, this bailout -- while small -- represents certain obstacles that policymakers will have to surmount. The fashion in which they accomplish this has implications for bailout policies going forward, and has the capacity to shake the tenuous confidence ECB President Mario Draghi has afforded the region via threats of unlimited bond purchases.

The European Commission forecasts that Cyprus' public debt will reach 97% of its gross domestic product (GDP) in 2013 and 103% by 2014. However, the nation's banks experienced losses in excess of four billion euros as a result of the Greek debt restructuring. It

Indian Finance Minister Palaniappan Chidambaram released a statement the other day indicating the government's deliberation of an additional hike to taxes on gold imports. Given that India has been the world's largest gold consumer for quite some time (although China is close to usurping that title), any policy measures aimed at crimping gold demand in the country warrant consideration. Policymakers bemoan gold's role in India's record high current account deficit. The Reserve Bank of India (RBI) published data indicating that the nation's current account deficit for the third quarter of 2012 reached an all-time high of $22.3 billion - a figure that represents 5.4% of India's gross domestic product.

The International Monetary Fund (IMF) describes the current account as:

the difference between the value of exports of goods and services and the value of imports of goods and services. A deficit then means that the country

Precious metals closed lower yesterday, and were broadly lower this morning, with gold slipping over 2% to touch its lowest level since August 2012. Since then, losses in the precious metals space have moderated with gold and silver sustaining losses just shy of 1% as this is being written. The violent move lower in metal prices was precipitated by the release of the minutes from the Federal Open Market Committee (FOMC) meeting in December 2012. It was at this meeting that the Fed announced its intent to purchase $40 billion worth of mortgage-backed securities (MBSs) and $45 billion worth of longer-term Treasuries on a monthly basis heading into 2013. The specific "revelation" provided by these minutes was the contention surrounding the longevity of this latest round of quantitative easing.

The word revelation above has quotations because in reality, division within the Fed's Board of Governors is nothing new. Every Fed

Wednesday's Federal Open Market Committee (FOMC) meeting ushered in yet another round of quantitative easing, with the central bank planning to purchase an additional $45 billion worth of "longer-term Treasury securities" on top of the $40 billion worth of mortgage-backed securities (MBSs) the Fed has been purchasing on a monthly basis since September. The newly adopted measure is meant to fill the gap left by the expiration of Operation Twist this month. Through Operation Twist, the Fed sold short-dated Treasuries from its balance sheet to purchase $45 billion worth of longer-dated Treasuries, on a monthly basis, in an effort to depress long-term borrowing rates.

While Operation Twist was inflation neutral (as the Fed was simply reallocating securities on its balance sheet), the announcement of this new measure gave no indication of plans to sterilize this latest round of quantitative easing, meaning that the Fed will be printing money

An independent audit of the Federal Housing Administration (FHA) released recently raised eyebrows as it projected anticipated losses in the FHA's mortgage portfolio will exceed revenue, resulting in a shortfall of $16.3 billion. As the funding gap is only "projected" at this point, FHA officials are assuring the general public that measures are being adopted to raise revenues and avoid the agency's first taxpayer-funded bailout since its inception in 1934. Time will tell as to the efficacy of the FHA's proposed measures, but the high degree of FHA participation in U.S. home loan originations means that an FHA insolvency, and any associated concerns regarding the availability of mortgage financing, could directly influence Fed policy - which is currently aimed at stimulating the economy via home purchases.

As gold is highly sensitive to monetary debasement (i.e. money printing) and broader monetary policy in the U.S., any developments in this

The point of this piece is to determine the crux of Fed policy, make a conclusion regarding the efficacy of its approach, and the associated implications for gold.

What is the Point of QE3?

Ultimately, the Fed seeks to depress long-term borrowing rates - specifically mortgage rates - via QE3's monthly purchases of mortgage-backed securities (MBSs). The goal of this measure is to stimulate home purchases, which will in turn give rise to higher home values, which will ideally precipitate rising domestic consumption as Americans "feel" wealthier. With 70% of the U.S. economy comprised of consumer spending, strength in this component of U.S. GDP is integral for achieving higher employment - hence the Fed's approach.

How Consumer Spending can Influence Gold

As it pertains to gold, consumer spending and broader employment in the U.S. are inextricably entwined with Fed policy and the associated monetary dilution. With the Fed committed to

The specter of confiscation has haunted gold investors for some time, but with increasing persistence as a legitimate "recovery" fails to materialize. Unscrupulous metal dealers will unflinchingly try to capitalize on these insecurities by pushing "confiscation-proof" products on unsuspecting consumers. It goes without saying that these items invariably command a larger premium than standard bullion products. The most important thing to bear in mind is that no one, save the pen-wielding legislators, can know what form and function a possible gold confiscation could take. While anything is possible, I am inclined to think that a re-imagining of FDR's gold confiscation is unlikely. The fundamental differences between 1933 America and today have given us more reason to fear exchange controls than an across-the-board confiscation.

On April, 5 1933, when President Franklin Delano Roosevelt penned into law executive order 6102 -- allowing for the confiscation of gold -- America was

Gold and silver continue to consolidate - with a moderate bias to the downside - in a continuation of sideways trading that has characterized this week's price action. U.S. equities have similarly stalled as market participants wait for some updated guidance regarding policymakers' solutions for the U.S. fiscal cliff and ongoing Greek debt concerns. Platinum and palladium have been the exceptions this week, performing admirably after Johnson Matthey Plc made a statement forecasting that this year we will witness the largest shortage of these two metals in over a decade.

The platinum/palladium story will be the topic of another article. The crux of today's piece is to consider two economic developments that have been eclipsed by the ongoing Greek and fiscal cliff dramas. Japan and China both released economic data recently that is noteworthy for a few reasons. The revelatory news coming out of Japan is specifically relevant to

Now that President Obama has won the election, what does that mean for precious metals?

Precious metals opened moderately higher Thursday morning in the aftermath of President Obama's reelection. However, once the U.S. stock markets started to tank (down over 2% at the time this was being written), metals have been pulled slightly lower and are currently in the red - but not nearly to the same extent as stocks. While precious metals may not have reacted dramatically to the election results, the reality is that President Obama is good for precious metal prices.

First, let's address the stock selloff. The European Commission reduced its 2013 growth outlook, stating the region should narrowly avoid recession with an annual growth rate of 0.1%. This is significantly lower than the commission's previous 2013 growth estimate of 1%. Combine ongoing European debt concerns with the looming prospects of President Obama and a