Fed Funds rate hike vs. gold

derryb

Rate hikes good for gold?

Gold actually thrives in a rate hike!

ricko

Thanks derryb.... interesting .... Cheers, RickO

cohodk

So many incorrect assumptions.....but I suppose that's to be expected by those who wish to control those who are afraid and lack confidencr. Why the conspiracists try so hard to manipulate is quite telling, but makes for good theatre.

In any case, if one understands why rates rise, they can easily see why gold generally does well. There is no need for manipulation and conspiracy theory, except by those who feed and benefit from doing such.

TwoSides2aCoin

Fed does what it does and counts beans. Sorta like some collectors count CAC stickers in their coin collection, but not really. I think gold is good for gold and the FED is good for a buck.

Baley

Well, they raised a quarter point.

The first opinion piece said, "So this newest Fed-rate-hike cycle couldn't be any more bullish for gold."

We'll see!

Baley

Surprising that I had to dig back a couple months for a Fed Thread, in days past, there would have been at least one discussion thread going on all week.

Maybe it's time for an exhaustion rally?

derryb

Rate increases are historically positive for gold due to the inflation they bring. Time (and inflation) will continue to prove it.

Gold's enemy at the moment is a FED fueled equity market and a number of weakening foreign currencies that are boosting the US dollar index. This will not change in the short term, but it will change - the chickens always come home to roost. I'll continue to scoop up the cheap eggs.

Baley

_ FED fueled equity market _

Does the Fed specifically target the Fuel to the equity (or housing) markets rather than gold?

Or do the People simply prefer to invest in those asset classes, perhaps based on historical returns, income generation, etc?

derryb

the speculating banks who benefit from the FED fuel get to choose their poison. Time will demonstrate how quickly they can change their choice and most likely all at once.

Scoop them eggs, sale ends. . .

cohodk

Enemy, speculating, eggs, poison, fuel, chickens.

Using the words above, let's see who can create the most humorous sentence.

ricko

The dollar goes up, gold goes down.... that one seems to be fairly constant... Cheers, RickO

MsMorrisine

@derryb said:
Rate increases are historically positive for gold due to the inflation they bring. Time (and inflation) will continue to prove it.

Gold's enemy at the moment is a FED fueled equity market and a number of weakening foreign currencies that are boosting the US dollar index. This will not change in the short term, but it will change - the chickens always come home to roost. I'll continue to scoop up the cheap eggs.

at one or two hikes per year, high inflation is not looming.

bluelobster

No one knows if there will be trade wars, but with Trump, it's a possibility, if that happens expect the cost of goods to go up, regardless of the dollar.

VanHalen

@bluelobster said:
No one knows if there will be trade wars, but with Trump, it's a possibility, if that happens expect the cost of goods to go up, regardless of the dollar.

Don't know about a trade war but it's safe to assume that China no likey what they see coming.

bluelobster

@VanHalen said:

@bluelobster said:
No one knows if there will be trade wars, but with Trump, it's a possibility, if that happens expect the cost of goods to go up, regardless of the dollar.

Don't know about a trade war but it's safe to assume that China no likey what they see coming.

Agreed, and the unnamed US auto maker is possibly fixin' to find out.

Baley

The chickens are speculating that the enemy has been using fuel harvested from bloviating gasbags to poison their eggs.

jmski52

The stock market is generally a leading indicator for the economy, usually by 6 months or so. At least that's what they used to say.

What I think we're seeing right now is a stock market that anticipates a "Trump-effect" even before any policy changes become reality, and anticipation that those policy changes would indeed be good for the markets.

What the Fed also seems to be saying is that the economy is doing well enough to warrant "taking away the punchbowl" over the next year via several (small) rate increases.

With rates as low as they are now, even a 0.25% rate increase is significant (percentage-wise) in the bond market, which in turn affects the stock market. So we have two influences pointing in opposition to each other - the stock market vs. the Fed's interest rate policy.

Last time around, the market threw a "taper tantrum". With the "Trump Effect" in play, something else might be going on.

Lots of built-in uncertainties for stocks, this time with a slight bias to the upside from the initial appearances. Get used to some volatility, I think it's going to be that way for awhile.

What about precious metals? Nobody seems interested in them now, and that's ok with me.

topstuf

@derryb said:
Rate increases are historically positive for gold due to the inflation they bring. Time (and inflation) will continue to prove it.

Well, it better be ...DEMAND/PULL inflation and not the destructive cost/push that we've lived with for 36 years or so.

Purchased goods must RISE in value.
While COSTS try to play catchup.

It's been the opposite.

Great for my ole pawnshop as it let me amass enough to make a lot of things moot.
But woe to those who couldn't GET ....predatory... rate income.