“But what about inflation? Inflation is quite high: should the Fed not keep its eye on the inflation rate and continue its rate hike trajectory? At a first glance, they should. But it would not surprise me if, in the coming months, the need for further rate hikes due to higher inflation is about to ease.” This was the conclusion to my article of last week. This week, I present you with the promised sequel.... »
Less Oil on US Inflation Fire
April 19 2017
Trump’s Tax Plans in Shambles, Stock Market Correction Ahead?
April 7 2017
Ever since it became known that Donald Trump would be the next American president, stock market indexes (the S&P 500, Dow Jones and Nasdaq) took an advance on his future tax plans. The Dow Jones rose by more than 12% after Trump´s election, while the S&P 500 rose by 10%. However, this so-called “Trump-trade” (buying stocks in anticipation of a future tax reduction) seems to be turning against itself, since it is not as easy as expected to actually lower taxes.... »
What Sets the Gold Price? Critical Thoughts on Paper and Physical Gold
April 5 2017
On various occasions I have written on how the gold price is determined. Some people, however, still insist that there exists a disconnect between “paper gold” and “physical gold.” This myth is a result of a complete misunderstanding about how futures markets actually work. This time... »
Fed Rate Hikes and Higher Gold Prices- Surprising? Anything But!
March 29 2017
Last week, I wrote that it was highly uncertain whether the Fed, as it had promised, would raise interest rates twice more this year. The fact that gold prices initially reacted positively on the rate hike in mid-March, might indicate that the gold market also questions the future rate hikes that the Fed promised.
I finished last week by saying that I would comment on another fact of utmost importance with repercussions for precious metals markets. Here it is.
There is, indeed, another reason why the gold price continues to rise after the recent Fed rate hike. In general, we could argue that gold prices tend to go up when monetary policy is expansionary and tend to go down when monetary policy is restrictive.
As I said before, the Fed raised interest rates from 0.75 to 1 percent in... »