"Kee" Points with Jim Kee, Ph.D.

Well, it looks like a pretty good finish for stocks this year, and we’ll be discussing our 2014 outlook in our upcoming webcast and market updates. Jeanie Wyatt wanted to discuss our gold position today in Kee Points, so I am including her comments below:

 

From Jeanie Wyatt: Our remaining position in gold was eliminated this month. As communicated, GLD represented our only commodity or materials exposure when it was purchased. First added last fall of 2012, it was a special situation in response to Fed statements then that monetary policy would remain easy for an extended period. I personally felt that the Fed statement then that money would be easy "until 2015" could be highly inflationary. We saw good US economic recovery prospects in 2012 due to a clear bottoming and improvement in housing and auto sales.

 

While monetary policy is still very accommodative, as described in this week’s FOMC pronouncements, tapering is very much in the works. Janet Yellen will not be as "dovish" as many describe in my view. She is a serious economist and understands the purpose of monetary policy and the downside of inflation. Also, Richard Fisher of the Federal Reserve adds a true hawkish bent. Eliminating gold is a first step in trying to reduce the interest rate sensitivity in our portfolios. On both the bond and stock side, rising interest rates is a scenario that we want to be defensive on.

 

Finally, five years have passed since the high financial risk period of The Great Recession of 2008. It was a miracle that it did not spiral into a global calamity. Now it seems like a bad dream. We have tried very hard to navigate through those unchartered waters. Bernanke’s statements were historical this week in my view.  A man whose policies were career long in developing, then delivered at the perfect moment in time (2008). Thank God. He moves on now and Fed policies will now go back to more normal ones we think for an uprighted world that seriously teetered.