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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FI FighterThe DudeSURVIVALISTS BLOG | Precious Metals: Is the Fed Rate Hike Already Priced In? – FI FighterHristomike Recent comment authors
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mike
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mike

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
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mike

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
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Hristo

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 will be minimal or even the gold to increase a bit.

Let’s see.

Regards!

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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
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The Dude

Crazy times? Hardly.

The Dude
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The Dude

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 extreme, which is why looking at today through the context of those two time periods makes everything look so normal. Rather than like a thief in the night, where it’s a total surprise, I would say it’d be more like a hurricane during hurricane season–you knew it was coming, just didn’t know the exact timing of it.

And for the last six years, it has been nothing but higher highs (until recently), but we were coming off an irrational low during a period of massive deleveraging. That in conjunction with an economy that recovered for the most part, and it makes sense we saw the performance we did. Markets ebb and flow. I’m certainly not arguing that the good times will invariably roll, but I also don’t see any evidence that we’ll see spontaneous collapse, which was relatively easy to spot in previous bubbles.

I miss those days of 5% savings accounts with almost no inflation…but alas, a remnant of the subprime days.

Currency swaps seem pretty risky to me. Other currencies seem relatively cheap right now, but what’s going to drive them up in the immediate future? Canadian currency will follow commodities, the Euro isn’t going anywhere in the time being. Getting 5% on p2p is super easy with low default rates and almost no correlation.

Once oil starts to turn back up, I’ll probably change my mind and consider other currencies. Until then, USD all the way.

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