Precious Metals: Is the Fed Rate Hike Already Priced In?

With the entire world fixated on what the Fed will announce tomorrow, I’m starting to have second thoughts on whether or not the implications of this much anticipated event haven’t already been baked into the cake…

As it pertains to precious metals, gold and silver are trading near 5 year lows, and many pundits are speculating that an imminent 25 basis point rate hike will only drive the prices that much lower…

When everyone expects the price of gold to crater below $1,000/oz, it almost feels like it’s not going to happen…

The mining stocks are down again this week, which is making me contemplate if I want to make any additional moves today…

I’m just speculating here, but I think we might see a “buy the rumor and sell the news” event tomorrow… The entire world is expecting a rate hike to happen! Of course, we live in absolutely CRAZY times right now, so I could really see the market reacting in either direction after the news…

What is a speculator to do? Well, I’m seeing bargains aplenty right now, so most likely, I’ll initiate a small purchase today…

A nibble…

Just in case a seemingly immaterial rate hike sends the markets into a selling frenzy after tomorrow, I would also like to have sufficient capital on hand to react…

 

What are your thoughts? The last time I posed this question, the consensus was to keep some dry powder on hand…

 

Happy Hunting!

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mike
mike
4 years ago

You already have a healthy position. Lets say your portfolio rises tomorrow on the Fed, great your doing well. Lets say it declines well now your down even more. At the end of the day it sounds like greed driving your decision making. Remember you are investing not gambling. If you want to gamble go to the Bellagio, you will have more fun.

best of luck

mike
mike
4 years ago

well certainly a gamble on the short term horizon, ie the fed will or will not make a massive splash. No one will know so in fact it is a complete gamble. I did not mean long term.

best of luck

Hristo
Hristo
4 years ago

Honestly, my opinion is that since we are talking so much and so long about these ridiculous 25 bps, a raise is already priced in the market prices. However, the key tomorrow will be how the market will read the meeting minutes. Because on what FED say, the market will adjust their expectations. If the expectations are for a several rate hikes in a year or two (not very likely), then we might see gold and gold shares to decline. If the outlook is that FED will wait to see some more supportive data, then the reaction from the traders… Read more »

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[…] As it pertains to precious metals, gold and silver are trading near 5 year lows, and many pundits are speculating that an imminent 25 basis point rate hike will only drive the prices that much lower… When everyone expects the price of gold to crater below $1,000/oz, it almost feels like it's not going to … Ask the Readers: How Are YOU Investing This Month? 2015 is nearly in the books, but this time around (unlike years past), we might have a little surprise in store for us. Article by precious metals investing – Google Blog Search. Read entire story here. […]

The Dude
The Dude
4 years ago

Crazy times? Hardly.

The Dude
The Dude
4 years ago
Reply to  FI Fighter

😀 yes, those days of banks paying 5% interest when there was 11%+ inflation, such as in 1972, WERE crazy times indeed! Talk about effective NIRP! We’re lucky to have had a competent central bank from 2008-present unlike the ECB. The ECB unfortunately followed unorthodox economic policies, unlike the US and now, while they are no longer following these policies, they’re having to recover from damage done. Like you said, it’s actually is a really positive sign that rates could finally be raised somewhat. That’s a huge step IMO. But even looking back in recent economic times, it’s a stretch… Read more »

The Dude
The Dude
4 years ago
Reply to  FI Fighter

I don’t think we disagree too much on what we’re seeing, but I think we see things a little differently in terms of degree. The global economy certainly is more integrated than ever before and will continue integration into the future. However, it is still not 100% correlated and there is still variability within the larger economies due to their ability (some stronger than others) to make independent fiscal and monetary decisions. This has been one of the big problems in the Eurozone (along with flawed economic thinking which appears to have been resolved for the most part). And on… Read more »

The Dude
The Dude
4 years ago

I suspect the subprime mess came as a shock to many people as did the dotcom bust, but if you were paying even a modicum of attention, it would have been readily apparent. You, for sure, would have seen it. There were bubble blogs up everywhere and it was all around the then blogosphere. Ditto the dotcom bust. Both reached the point where it was like musical chairs. Everyone seemed to know that the music was going to stop at some point and someone would be short a chair, just nobody knew when. And both of these cases were pretty… Read more »

The Dude
The Dude
4 years ago
Reply to  FI Fighter

Oh yeah…the Bay Area is insane right now. No doubt about that. Actually, it would be fun to look at the data and figure out which time is worse. Imagine this in every major city though and the only reason people were able to buy the property was due to a no documentation, interest only, negative amortization loan. At least today, purchases are based in some sort of reality because lending standards are much stricter now. The Bay Area is going insane in large part to private equity. I think I was mentioning this in a thread this summer. Once… Read more »