Fed Holds Rates But Decision Was Not Unanimous: Gold Plays

The Fed, with Bernanke in limbo, decided to hold interest rates, but there was one dissenter who wanted higher rates:

FOMC HOLDS FED FUNDS RATE TARGET AT 0.25%; VOTE 9-1

REITERATES RATES TO STAY EXCEPTIONALLY LOW FOR "EXTENDED PERIOD"-

Vote was 9-1 to keep rates on hold (Hoenig dissented)

• Hoenig believed that economic and financial conditions had changed sufficiently that the expectation of exceptionally low levels of the federal funds rate for an extended period was no longer warranted.
• MBS to end in March as scheduled
• Inflation to be subdued for sometime; Bank lending continues to contract
• Deterioration in the labor market is slowing
• In light of improved functioning of financial markets, the Federal Reserve will be closing the Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility, the Commercial Paper Funding Facility, the Primary Dealer Credit Facility, and the Term Securities Lending Facility on February 1, as previously announced. In addition, the temporary liquidity swap arrangements between the Federal Reserve and other central banks will expire on February 1.
• The Federal Reserve is in the process of winding down its Term Auction Facility: $50B in 28-day credit will be offered on February 8 and $25B in 28-day credit wil be offered at the final auction on March 8. The anticipated expiration dates for the Term Asset-Backed Securities Loan Facility remain set at June 30 for loans backed by new-issue commercial mortgage-backed securities and March 31 for loans backed by all other types of collateral.
  
  Here are gold straddles for February, for GLD and our favorite, Yamana, AUY:
  
  
  
  
  Please do your own due diligence. This is not advice. Options are very dangerous and may cause 100% loss.
  
  Computed with StraddlesCalc Tool