As we've long argued, the biggest impact of quantitative easing on financial markets has been the suppression of equity market volatility. The absence of volatility gives investors comfort in maintaining long exposure, and has undoubtedly played an important, if unquantifiable, role in the equity bull market since mid-2009.
As of now, it appears that the latest iteration of QE will be over by year end, and the Fed anticipates hiking interest rates within the next 18 months. Many gold (COMEX:GCJ14) bears argue that higher real interest rates will keep downward pressure on gold for some time. While we don’t necessarily agree with that statement, the road to higher real interest rates will likely be turbulent, and there is nothing that gold loves more than market volatility.