Friday’s comments by Federal Reserve Vice Chairman Stanley Fischer have strengthened the dollar and put pressure on the price of gold this morning.
He indicated that the U S economy has strengthen, with strong jobs data in the last three months. He had seemed to hedge his bet that rates will be on the table at the September meeting by saying, “the problem with this economy is there is so many numbers each day. You have to try and figure out what is the main thrust of what’s going on in the economy.”
St. Louis Fed President James Bullard said, “next month might be a good time to raise rates,” but refused to give a firm time table.
Since the precious metals markets are so dependent on the direction of interest rates, how can one make a smart decision on how to invest in this market after listening to these comments by the Fed participants?
A good indicator of what most people believe the direction of the gold market will be going forward is, to view the activity in the gold ETF market. If you look at a bar chart of the gold holdings, you can draw almost a straight line across the top indicating there has been very few additions or reductions in the holdings over the past few weeks.
It seems to me that it’s almost an impossible task for the FED to make a move now with the conflicting data released each week. I’m sure they have the right intentions in mind, but with more and more people in the media screaming, “let’s do something” it makes them reluctant
to raise rates unless they have compelling data to back them up.
So I have an idea. Since congress is on a well-deserved seven-week vacation, let’s all donate our air miles to the FED so that they can take a long break. This will give them a chance to clear their heads and take some pressure off. I believe a seven-week vacation is just what the doctor ordered. Then they will return a month before the election refreshed and ready to start again. Come to think of it, let’s send Donald and Hillary with them. I’m sure the country can use a vacation from them, too.
Author Name: Walter Pehowich
Walter Pehowich is the executive vice president of precious metals investment services for Dillon Gage with over 38 years of experience in precious metals investment services. His career began in 1977 at Bache (which evolved to Prudential-Bache Securities and then Jefferies Investment Bank). While at Jefferies, he served as senior vice president with oversight of investment grade precious metal products. Pehowich holds a National Futures Association (NFA) Series 3 license, authorizing him to advise and sell alternative investments in commodities and futures markets.