Best of the Week
Most Popular
1. Stock Markets and the History Chart of the End of the World (With Presidential Cycles) - 28th Aug 20
2.Google, Apple, Amazon, Facebook... AI Tech Stocks Buying Levels and Valuations Q3 2020 - 31st Aug 20
3.The Inflation Mega-trend is Going Hyper! - 11th Sep 20
4.Is this the End of Capitalism? - 13th Sep 20
5.What's Driving Gold, Silver and What's Next? - 3rd Sep 20
6.QE4EVER! - 9th Sep 20
7.Gold Price Trend Forecast Analysis - Part1 - 7th Sep 20
8.The Fed May “Cause” The Next Stock Market Crash - 3rd Sep 20
9.Bitcoin Price Crash - You Will be Suprised What Happens Next - 7th Sep 20
10.NVIDIA Stock Price Soars on RTX 3000 Cornering the GPU Market for next 2 years! - 3rd Sep 20
Last 7 days
Further Gold Price Pressure as the USDX Is About to Rally - 23rd Oct 20
Nasdaq Retests 11,735 Support - 23rd Oct 20
America’s Political and Financial Institutions Are Broken - 23rd Oct 20
Sayonara U.S.A. - 23rd Oct 20
Economic Contractions Overshadow ASEAN-6 Recovery - 23rd Oct 20
Doji Clusters Show Clear Support Ranges for Stock Market S&P500 Index - 23rd Oct 20
Silver Market - 22nd Oct 20
Goldman Sachs Likes Silver; Trump Wants Even More Stimulus - 22nd Oct 20
Hacking Wall Street to Close the Wealth Gap - 22nd Oct 20
Natural Gas/UNG Stepping GAP Patterns Suggest Pending Upside Breakout - 22nd Oct 20 -
NVIDIA CANCELS RTX 3070 16b RTX 3080 20gb GPU's Due to GDDR6X Memory Supply Issues - 22nd Oct 20
Zafira B Leaking Water Under Car - 22nd Oct 20
The Copper/Gold Ratio Would Change the Macro - 21st Oct 20
Are We Entering Stagflation That Will Boost Gold Price - 21st Oct 20
Crude Oil Price Stalls In Resistance Zone - 21st Oct 20
High-Profile Billionaire Gives Urgent Message to Stock Investors - 21st Oct 20
What's it Like to be a Budgie - Unique in a Cage 4K VR 360 - 21st Oct 20
Auto Trading: A Beginner Guide to Automation in Forex - 21st Oct 20
Gold Price Trend Forecast into 2021, Is Intel Dying?, Can Trump Win 2020? - 20th Oct 20
Gold Asks Where Is The Inflation - 20th Oct 20
Last Chance for this FREE Online Trading Course Worth $129 value - 20th Oct 20
More Short-term Stock Market Weakness Ahead - 20th Oct 20
Dell S3220DGF 32 Inch Curved Gaming Monitor Unboxing and Stand Assembly and Range of Movement - 20th Oct 20
Best Retail POS Software In Australia - 20th Oct 20
From Recession to an Ever-Deeper One - 19th Oct 20
Wales Closes Border With England, Stranded Motorists on Severn Bridge? Covid-19 Police Road Blocks - 19th Oct 20
Commodity Bull Market Cycle Starts with Euro and Dollar Trend Changes - 19th Oct 20
Stock Market Melt-Up Triggered a Short Squeeze In The NASDAQ and a Utilities Breakout - 19th Oct 20
Silver is Like Gold on Steroids - 19th Oct 20
Countdown to Election Mediocrity: Why Gold and Silver Can Protect Your Wealth - 19th Oct 20
“Hypergrowth” Is Spilling Into the Stock Market Like Never Before - 19th Oct 20
Is Oculus Quest 2 Good Upgrade for Samsung Gear VR Users? - 19th Oct 20
Low US Dollar Risky for Gold - 17th Oct 20
US 2020 Election: Are American's ready for Trump 2nd Term Twilight Zone Presidency? - 17th Oct 20
Custom Ryzen 5950x, 5900x, 5800x , RTX 3080, 3070 64gb DDR4 Gaming PC System Build Specs - 17th Oct 20
Gold Jumps above $1,900 Again - 16th Oct 20
US Economic Recovery Is in Need of Some Rescue - 16th Oct 20
Why You Should Focus on Growth Stocks Today - 16th Oct 20
Why Now is BEST Time to Upgrade Your PC System for Years - Ryzen 5000 CPUs, Nvidia RTX 3000 GPU's - 16th Oct 20
Beware of Trump’s October (November?) Election Surprise - 15th Oct 20
Stock Market SPY Retesting Critical Resistance From Fibonacci Price Amplitude Arc - 15th Oct 20
Fed Chairman Begs Congress to Stimulate Beleaguered US Economy - 15th Oct 20
Is Gold Market Going Back Into the 1970s? - 15th Oct 20
Things you Should know before Trade Cryptos - 15th Oct 20
Gold and Silver Price Ready For Another Rally Attempt - 14th Oct 20
Do Low Interest Rates Mean Higher Stocks? Not so Fast… - 14th Oct 20
US Debt Is Going Up but Leaving GDP Behind - 14th Oct 20
Dell S3220DGF 31.5 Inch VA Gaming Monitor Amazon Prime Day Bargain Price! But WIll it Get Delivered? - 14th Oct 20
Karcher K7 Pressure Washer Amazon Prime Day Bargain 51% Discount! - 14th Oct 20
Top Strategies Day Traders Adopt - 14th Oct 20

Market Oracle FREE Newsletter

How to Get Rich Investing in Stocks by Riding the Electron Wave

Central Banking Cartel Promises ZIRP Until at Least 2023

Interest-Rates / Negative Interest Rates Sep 22, 2020 - 06:04 PM GMT

By: MoneyMetals

Interest-Rates

Gold and silver investors who were hoping Wednesday’s FOMC meeting would be a catalyst for a major breakout move were largely disappointed.

The metals complex didn’t see an immediate boost from the Federal Reserve’s dovish policy meeting. Still, the central bank’s commitment to an accommodative monetary policy is set to play out not just over the course of a week, but of years to come.

On Wednesday, the Federal Reserve announced it would continue to hold its benchmark interest rate near zero. That came as no surprise.

However, the extent of the Fed’s commitment to avoid any rate hikes in the future raised the eyebrows of many veteran observers of monetary policy. Not only did members of the central banking cartel vow to keep rates down for the remainder of the year. They also signaled there would be no rate hikes in 2021. 


But they went even further than that. All voting members with the exception of one pledged to keep interest rates near zero through 2022.

And a majority voted to maintain current interest rate policy at least until the end of 2023!  That’s zero percent interest rates as far as the eyes can see!

Yahoo Finance Report: The latest FOMC meeting has reassured markets that there is no chance for a rate hike for a least two years. The euro-dollar futures market, which trades out much farther than the Federal Funds futures market is forecasting a 25-basis point rate hike in mid-2024. That shows that the market is currently expecting the negative effects of the pandemic to linger and hurt the economy for many years to come.

Yahoo Finance Analyst: Now, the Federal Reserve codifying that in the statement today, committing to keeping interest rates at that level until labor market conditions have reached levels consistent with the committee's assessment of maximum employment and inflation has risen to 2% and is on track to moderately exceed 2% for some time.

No economist or market guru on the planet has a crystal ball that can tell them what the GDP or the unemployment rate or the inflation rate will be three or four years from now. But apparently Fed officials think they are smart enough to see that far into the future and are able to know today what the optimal interest rate will be then – that is, effectively zero.

The truth is that all they know how to do is react to signals given to them by markets, politicians, and banks.

If the repo market freezes up or stocks on Wall Street tank, they roll out more stimulus.

If the government needs to expand its borrowing capacity by trillions of dollars to finance deficits, then they commit to buying more Treasuries.

If the leveraged financial system requires more inflation to eat away at the real value of otherwise unpayable debt obligations, then they commit to depreciating the currency at a more rapid pace.

The Fed is continuing its $120 billion per month Quantitative Easing program, which has ballooned its balance sheet to more than $7 trillion. And it won’t turn off the monetary spigots until government-measured inflation rates exceed 2% over some unspecified period.

An inflation rate above 2% with interest rates remaining well below that level would be a hugely bullish driver for precious metals markets. According to the World Gold Council, in years when the inflation rate has exceeded 3%, the price of gold increased 15% on average.

Gold and silver do not merely keep pace with rising inflation. They tend to hugely outperform it.

Of course, if there comes a time when the Fed is forced to aggressively hike rates above inflation to bring it back down, then the metals can suffer outsized declines.

An environment of positive real interest rates and declining inflation rates do not appear to be something metals investors will need to worry about anytime soon – and probably not for the next few years.

There will be inevitable volatility along the way, but it’s hard to see anything but a continuation of the major bullish trend going forward.

The coronavirus lockdowns were certainly a catalyst for a surge in physical buying this year. Even though bullion market conditions have since settled down, sales of coins, rounds, and bars continue to far outpace those of a year ago.

We are eyeing the upcoming election as the next potential catalyst. With polls tightening between President Donald Trump and former Vice President Joe Biden, fears are growing over a contested election that could drag on for weeks.

An expected torrent of mailed-in ballots could overwhelm state election systems. The backlog could spark highly charged fights in the courts and on the streets over which ballots get counted and which ones get thrown out as late, incomplete, or fraudulent.

If there is anything sure to rattle markets, it’s uncertainty. During uncertain times when the only thing that can be counted on from the authorities is to keep printing currency, precious metals provide a rock solid and necessary counterbalance to conventional “risk” assets. 

By Mike Gleason

MoneyMetals.com

Mike Gleason is President of Money Metals Exchange, the national precious metals company named 2015 "Dealer of the Year" in the United States by an independent global ratings group. A graduate of the University of Florida, Gleason is a seasoned business leader, investor, political strategist, and grassroots activist. Gleason has frequently appeared on national television networks such as CNN, FoxNews, and CNBC, and his writings have appeared in hundreds of publications such as the Wall Street Journal, Detroit News, Washington Times, and National Review.

© 2020 Mike Gleason - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in

6 Critical Money Making Rules