March 15-16 Fed Interest Rates: The beginning of monetary policy normalization and 3 things to look for
interest rate--confidence---inflation
1-The conventional view is that gold prices fall as real interest rates rise.
As the FED first interest rate rise how did GOLD do ??
if the conventional view is true...GOLD Up $200 Dollars from Dec 1060 to March 1270 how can this be....
2-conventional view is that another driver of the gold price is confidence
More specifically pessimistic or optimistic view about the long-term economic future of society
Think GREENSPAN said it best when he said I've never seen so many unknowns
The conventional view Gold is inversely related to confidence in the long-term economic future of society
gold is an anti-fiat asset when the major fiat currencies come under pressure, gold offers an attractive alternative.
explampe--The pound sinks to new lows on rising BREXIT FEARS
3-The process of policy normalization by the Fed will trigger a rise in the rate of inflation.
conventional view that inflation can only be produced by an “overheating” economy
Price level depends upon two key factors: the value of goods and the value of money
level can rise for one of two reasons; either
(a) the value of goods rises, i.e. the economy overheats
(b) the value of money falls. And next thing you found out cabbage cost you $10 dollars
Inflation would provide the key for GOLD to move LOT higher and Currency War the race to the bottom sure add to it
So we wait for the FED while we hold a full house in hand
Next 0.25% in interest rate gold going to $1400
My Take on it.....TIK TOK