The dreaded rate hike DEFINING THE TWO-STAGE GOLD PATTERN
This pattern is relatively simple to understand when one considered the psychology behind the price moves. It starts with a Fed Funds Rate Increase after an extended period of lower Fed Funds Rate levels. When the Fed starts to raise rates, Gold tends to experience an almost immediate rally. Here are some recent examples:
Dates | FFR Rate Increase | Gold Increase |
Oct-93 ~ Feb-96 | 3% ~ 6% | +22% |
Apr-99 ~ Jul-99 | 4.75% ~ 6.5% | +33% |
Apr-04 ~ Jul-06 | 1.0% ~ 5.25% | +95% |
Oct-15 ~ Aug-19 | 0.13% ~ 2.42% | +46% |
Mar-21 ~ Now | 0.07% ~ 1.21% | +24% |
Each of these Gold rally phases was accompanied by a second-stage Gold rally when the US Fed suddenly reversed direction and started lowering Fed Funds Rates. It appears this panic by the Fed sends a jolt of fear into the markets – driving Gold & Silver into a potential parabolic price trend if the conditions are right. Here are some examples.
Dates | FFR Rate Increase | Gold Increase |
Oct-93 ~ Feb-96 ~ Dec-98 | 3% ~ 6% ~ 4.63% | +22% ~ -28% |
Apr-99 ~ Jul-99 ~ Dec-03 | 4.75% ~ 6.5% ~ 1.0% | +33% ~ +67% |
Apr-04 ~ Jul-06 ~ Sept-11 | 1.0% ~ 5.25% ~ 0.08% | +95% ~ +245% |
Oct-15 ~ Aug-19 ~ Apr-20 | 0.13% ~ 2.42% ~ 0.10% | +46% ~ +49% |
Mar-21 ~ Now | 0.07% ~ 1.21% ~ Unknown | +24% ~ Unknown |