FOMC Statement Punishes Gold, Boosts Stocks

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The guardedly upbeat comments in the March FOMC report yesterday pushed equity markets to new multi-year highs. At the same time Gold bugs were disappointed by the lack of any mention of QE3. The statement starts with the following comments about the general economy:

Information received since the Federal Open Market Committee met in January suggests that the economy has been expanding moderately. Labor market conditions have improved further

As discussed in a previous post, recently Gold has been trading as the anti-dollar, mostly swayed by the
prospects of further moneary stimulous by the Fed. It is no longer positively correlated to equities. Gold's recent price action shows the fallacy of thinking of precious metals as an investment. Barring the need for protection against a collapse of the financial system, an "asset" that does not pay dividends and never ever will is probably not a good investment.