With the recent flurry of bad data coming out from the federal government and the ongoing #retailpocalypse, it is becoming quite clear that we are heading head first into another recession. The ironic comical aspect is that while we are clearly slowing down, the federal reserve is talking the economy up AND RAISING INTEREST RATES... I find this to be hysterical, but it will not be very funny when shit hits the fan. Raising interest rates by definition raises inflation, because our entire economy is built on debt. Everything from credit cards to student loans relies on this interest rate.
Interest rates were at zero a year ago, now they are inching up and people are terrified. The new home sales went up way more than expected in anticipation of more rates hikes. But I believe this will be the last rate hike, because there is no way to continue ignoring all the bad data. Even the PMI numbers this week came in below expectations. Which is why I believe that Gold and Silver went up at the same time.
Gold and Silver are supposedly sensitive to interest rate hikes. However, the opposite is clearly true, considering gold prices only started moving up AFTER the Fed started raising rates and only going DOWN when the FED TALKED about raising rates. Slowly, but surely, Gold has been moving up this whole time, only affected by the "Hawkish" Fed comments...Look at this Gold Chart and compare them to the actual rate hikes. (APMEX Charts)
Correlation or Causation? I'll let you decide, but there are several things that are for certain:
The economy is undoubtedly slowing down, despite the rosy pictures being painted by Trump and the Wall Street
This is the second longest economic expansion(if you want to call it that) in American history.
Stock Market, specifically the NASDAQ, is extremely overvalued(and tech stocks do not generally offer dividends)
The USD has surrendered most of its gains since the Trump hysteria, despite all the talk from the Federal Reserve and the Trump Administration about more jobs. (There is virtually no data to support strong economic growth, except for little pockets of manufacturing coming back to life)
I think Gold is going to take off, along with silver(which is INSANELY undervalued). $2500 sounds like a fair, inflation adjusted number, and $100 for silver also sounds fair.
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