Will Trump End the Fed?
Arkadiusz Sieron
GoldSeek.com
Friday, 23 December 2016
For many months, the price of gold has been driven by the Fed’s moves and the prospects of interest rate hikes. Therefore, the natural question after the Trump victory is how his presidency will affect the Fed’s actions and, thus, the gold market. There are several ways the Trump’s presidency may influence the U.S. central bank.
First, the new president could replace Fed Chair Janet Yellen (as well as Fed Vice Chair Stanley Fischer), as he stated once that he “would be more inclined to put other people in”. Although Trump was critical of her, the law only permits the president to remove a member of the Board of Governors “for cause” and historically this authority has never been abused. In theory Yellen could resign, however it seems unlikely (and it would be rather uncommon in the Fed’s history). Therefore, the Fed’s leadership will probably not change until 2018, when Yellen’s and Fischer’s terms expire (in February and in June, respectively). Hence, the impact on gold should be limited, as the change will be over a period of several months and markets will manage to gradually price in.
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