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Do you believe your eyes or do you believe the Fed? That’s the question many investors are asking themselves as they peer into their financial crystal balls to decipher the schizophrenic approach to economic recovery the Federal Reserve displayed following their FOMC press conference for June.
On one hand, they finally put a pause on rate hikes. On the other hand, they predicted two more rate hikes this year. This appears to go against common sense as we look around and see the actual numbers. The economy is in trouble and any benefits from hiking rates appear to have already been realized. Yet Jerome Powell et al seem bent on keeping our expectations low.
Many in the sector aren’t buying it. In a recent interview, Chantelle Schieven, head of research at Capitalight Research, said that despite all the hawkish talk, she thinks that the Federal Reserve is done raising rates. She expects that economic conditions will start to deteriorate during the summer and the Fed’s next move will be to cut rates by the end of the year.
Schieven’s outlook is also in line with comments from BlackRock last week, saying that they expect May was the central bank’s last move. Some analysts are comparing the Fed’s current stance to that of December 2018 when it signaled two rate hikes in 2019. The central bank ended up cutting rates three times that year and gold prices rallied 18%.
If this rate hike pause is likely going to last longer than one meeting, why would the Fed be playing coy? According to Jonathan Rose, co-founder of Genesis Gold Group, it comes down to holding the U.S. Dollar’s value for just a little longer.
“The Fed is trying to maintain stability even if doing so will hurt the economy in the long-term,” he said. “And you have to wonder if they’re pulling back on the reins to keep gold from skyrocketing.”
Precious metals prices have been relatively stable since the price spiked following the banking collapses in March. If the Fed doesn’t intend to raise rates the rest of the year, the only reason they wouldn’t hint at that would be to keep precious metals from making more record-breaking moves. If that’s the case, it could mean they are preparing for the coming Digital Dollar, a Central Bank Digital Currency that many are concerned about because of the privacy and authoritarian issues it poses.
“Our customers are gravely concerned about Central Bank Digital Currencies, which is one of the biggest reasons they’ve been letting us move their retirement accounts into self-directed IRAs backed by physical precious metals,” Rose said. “If the Fed plans on launching the Digital Dollar sooner rather than later, their recent actions jibe with that prospect.”
Is the Fed trying to prevent a rush by investors to buy up as much gold and other precious metals as possible? If so, it could mean the Digital Dollar is much closer than anyone’s admitting.
Protect your retirement today by requesting the free Definitive Gold Guide from Genesis Precious Metals.
(Note: The information provided by The Liberty Daily or any related communications is for informational purposes only and should not be considered as financial advice. We do not provide personalized investment, financial, or legal advice.)
