The Fed’s Raised Rates

The Fed appears to have a problem on its hands, and markets are watching. The gold market, like many other asset classes, has been paying close attention to the ebb and flow of hawkish and dovish rhetoric from the central bank.

Investors seem to be taking a “wait and see” attitude at this point, neither willing to truly commit but also not willing to stand idly by.

Stocks have been going up for years now, while interest rates have remained artificially low. The gold market has remained largely range bound in recent months, seemingly looking to the Fed for some sense of what is going on. The definitive answer does not appear to be coming any time soon.

Despite the fact that the Fed has raised rates multiple times already, and by 75 points at a clip, the central bank may begin to worry more about the health of the economy.

The reality of the situation is that the Fed likely sees serious underlying problems. These problems are so severe that the central bank does not want to do anything more to hamper the “recovery.”

Declining manufacturing, lackluster job growth, slow consumer consumption and other data points all seem to agree that the economy is not, in fact, as strong as many would believe.

The Fed seems to see the writing on the wall, as the central bank has downgraded its economic outlook for not several months but the next few years.

Hike Or No Hike…

One cannot deny that the stock market has held its ground, and may in fact make new all-time highs yet again. One has to wonder, however, just how much longer this apparent denial can continue.

The dollar index has been the talk of the town in recent months, reaching multi-year highs perhaps based solely on the notion of higher rates. The dollar bulls, however, seem to be fading fast. A lot of hot air has been let out of the greenback balloon as investors now reconsider the prospects for more rate hikes. The markets are telling us something….

The Fed has stated several times that the decision to hike rates would be “data dependent.”

Well, if that is the case then rates are not likely going anywhere anytime soon. Hot inflationary data may force the Fed’s hands, however, and could fuel several more rate hikes in 2023, albeit by less than 75 points a pop.

A rate hike by the Fed at this point may serve only one purpose, to make the Fed seem more credible after months of rate hike discussions.

Even if an initial hike is in fact implemented, the Fed has also stated time and time again that the pace of any increases would be gradual.

Hike or no hike, this is likely already “baked into the cake” when it comes to current prices in several asset classes, gold being one of them.

Gold has held support on numerous occasions in recent months. Buyers have stepped in time and time again, effectively buying the dips. Perhaps they know something that you don’t….

The Bottom Line

The Fed is stuck, and that is becoming more and more apparent.

As investors become more aware of just how fragile the economy really is and realize that it could also slip back into recession, the QE-inflated rally in stocks will find its end. At that time, which may be sooner rather than later, alternative assets such as gold and silver may stand to benefit substantially.

If you take a closer look, we believe you will arrive at the same conclusion.

Now is the time to be thinking of the future. Now is the time to be looking for places to put your wealth to work, places that have proven reliable in the past.

Gold and precious metals may see a significant influx of investment once the music stops. Don’t be the one left without a chair…

Things are not as great as they seem. Act today. Learn more about this unique asset class and how it may serve to help protect your wealth.