Tapering is not the same as tightening even though everyone seems to view these terms as synonyms. We had previously described tapering as highly unlikely, but the truth is that it was an oversimplification that we used to make a point about the possibility of monetary policy tightening without getting into details - which we do in the December Market Overview.

Some form of “tapering” may actually happen even though the Fed stays “easy like Sunday morning” in its approach to money printing, and… One form of tapering has already been seen in 2010!

The truth is that there's much more to the tapering issue than just the Quantitative Easing program simply because there are more tools that the Fed uses than the QE itself:

1. Interest rates are kept very low for a significant amount of time
2. Quantitative easing, which means money production for support of various assets, especially government bonds
3. Easing in terms of qualitative aspects, that is the expansion of the Fed's balance sheet which has benefited not only government bonds, but also mortgage backed securities

One of the most important questions for gold investors regarding Fed's policy is what could be tapered and what's highly unlikely to be tapered. The even more important question is how it will impact gold market and your portfolio. You'll find details in today's essay.