Daniel Ameduri, founder of the Wealth Research Group, traces the correlation between Fed rate hikes and the trajectory of the gold markets, predicting a long-term bullish period for the precious metal.
Since launching Wealth Research Group at the beginning of 2016, I have dedicated a considerable amount of time understanding precious metals, and their relationship to other factors and assets.
From 1971, when gold began trading freely, there have been times of massive inflation, credit crises, deflationary periods, high interest rates and low ones, peace times and excessive wars, currency devaluations and even negative interest rates.
The economy went through so many situations and conditions the past 45 years that it’s easy to see why people have stopped doing research themselves blindly listen to mainstream media talking heads.
The narrative that investors are being fed with right now is that gold doesn’t produce yield, so rising interest rates would absolutely be problematic for gold prices, but that’s conventional wisdom, and everything I have learned about financial markets tells me that following it will surely lead to terrible results.
Bull markets end with euphoria!
Today gold mining shares represent only a fraction of global assets—compare that to 2013, and you will appreciate the enormous upside potential (see the chart above).
There are two important factors to keep in mind:
1. Inflation:
Interest rates are rising since the FED and the government see inflation starting to recede from historical lows, and with the proposed infrastructure plans, other construction metals have already began trading higher. What’s paramount to understand is that rates rise, but so does inflation, so real rates remain low and even negative.
In fact, Goldman Sachs turned bullish on commodities for the first time in years.
2. Tightening Periods vs. Gold:
Contrary to what the mainstream media is feeding …read more