Talk of another rate hike by the Federal Reserve has largely dominated the financial media for some time now, and recent hawkish commentary from several Fed officials has markets on edge.
The Fed will meet again on September 21st, and investors will be paying close attention. For now, Fed Funds futures are pricing in about a 24 percent chance of a hike this month, while those same contracts are currently predicting a 58 percent chance of a hike in December. The real question is:
Does it matter?
It’s not as if another hike by the Fed would come as a complete surprise. In fact, the subject has gotten almost boring, and it has been nearly nine months since the central bank raised rates for the first time in nearly a decade.
Perhaps much bigger than the idea of a single rate hike or even a few rate hikes is the notion of the money spigot being capped. Stock investors have come to love low rates, and have become quite accustomed to them.
While some might argue that higher rates are bearish for gold and that higher rates will spell “doom” for gold and precious metals, we take the opposite view.
Last Friday, hawkish commentary from a Fed official was likely a main catalyst for a stock market sell off that saw the broad market S&P 500 decline by nearly 2.5 percent while the Dow Jones Industrial Average shed over 394 points.
Spot gold, on the other hand, fell by a few dollars per ounce…
The bottom line is this: We believe that the next rate hike-even series of rate hikes-has likely been discounted by the gold market.
Stocks, on the other hand, could potentially see significant selling if the Fed does in fact tighten. It seems to us that stocks have a lot farther to fall from current levels than gold or silver.
And while gold and silver could see some further selling pressure-at least initially-if the Fed does hike, we believe that this would present nothing more than an excellent buying opportunity.
And let’s not forget that the Fed could raise rates just to lower them again….
In our view, the global economy is far from ready for an environment of higher rates. Just look at China, the EU or Japan.
Add to that the fact that much of the U.S. data is still far from “robust,” and you have a situation where global rates are likely to remain quite low for quite a long time.
Gold has shown signs of entering the beginning stage of what could be an extensive cyclical bull market. The question is: Do you want to ride the stock market elevator lower or get on the stairwell to higher gold prices?
If adding physical gold, silver or other precious metals to your holdings makes sense to you given the global economic backdrop and potential for further currency depreciation, don’t delay in acquiring these assets. Fortunately, doing so has never been easier than it is today.
Speak with an Advantage Gold account executive today about your options for physical gold or silver ownership. We can show you exactly how to begin acquiring and holding these important precious metals to help protect your financial future, and can even show you how to buy them using your IRA account.
Don’t wait for stocks to crumble again or for gold prices to skyrocket. Learn more about the potential benefits of physical gold and silver ownership today. To get started, just pick up the phone and call us at 1-800-341-8584.Tags: advantage gold, expectations, gold, interest rate hike, silver, stock market collapse