Sell the rumor and buy the news… Gold was $1,075 for rate hike 2015, $1,128 for rate hike 2016, and today, it’s trading at around $1,205.
Clearly, we have a trend with the rate hikes – gold is moving higher and higher! Traders, institutions, and algorithms sell the metal going into the rate hike and buy it in the days that follow, which seems to be the perfect buying opportunity.
Volatility between hikes is obvious, but the fact remains that from rate hike to rate hike, gold is moving up. The reality is that the FED is way behind. Interest rates are negative to the real rate of inflation, which is the most bullish indicator for the gold market.
In the 1970s and the mid 2000s, as the FED tried to play catch-up with rate hikes like they are now, the result is that gold soared! It’s likely we will see a FED rate hike on Thursday, which means Thursday and Friday will be great buying opportunities for the shares as well.
This is especially true because between this rate hike and the next (fall of 2017), gold will likely trade for over $1,300 – or even at 52-week highs.
Let’s not forget that the debt ceiling will be breached on tomorrow, and the U.S. Treasury has less cash than many of the Dow stocks, so things could get real very fast as a highly polarized D.C. debates raising the debt limit for the largest debtor in the world: the United States.
Look for our special gold report – with new 2017 stock suggestions – early next week.