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Written by Chris Marcus of Arcadia Economics

This week the Federal Reserve had its latest policy meeting, and as widely expected raised its short-term interest rate by another 25 basis points. Which given the precarious state of today’s economy, is great reason to purchase gold and silver as a response.

Because while the Fed under chairman Jerome Powell claims to see only positives for the economy going forward, the rest of the world is experiencing a much different reality.

As a result of the Fed’s interest-rate increases in recent years, many of the emerging market economies are already experiencing currency chaos. And while wider turbulence has yet to impact the pricing in the U.S. markets, the evidence that the real estate market is running into trouble continues to emerge. With similar consequences becoming increasingly more likely in the stock and bond markets as well as the Fed continues to attempt to unwind its low-interest-rate policy.

How the Fed remains unwilling or unable to see this remains an open question. Yet keep in mind that the Fed was not able to see the subprime crisis, even as it was happening.

March 28th, 2007 – Ben Bernanke: “At this juncture . . . the impact on the broader economy and financial markets of the problems in the subprime markets seems likely to be contained,”

May 17th, 2007 – Bernanke: “While rising delinquencies and foreclosures will continue to weigh heavily on the housing market this year, it will not cripple the U.S.”

June 20th, 2007 – Bernanke: (the subprime fallout) “will not affect the economy overall.”

So just because the Fed says that everything is alright, does not mean it is so.

Additionally, Powell and the Fed fascinatingly mentioned how they are not concerned about inflation getting out of control. Which struck me as odd given how only a few months ago, the Fed’s CPI metric showed an inflation rate of 2.8%. Which is well in excess of the 2% mandate that the Fed is supposedly guided by and was the highest reading in 6 years.

In reality, whether the Fed ever acknowledges it or not, it’s running into the same problems it encountered the last time it lowered interest rates and then tried to undo that policy. The result was the collapse of the subprime market.

And if that’s what happened after taking interest rates down to 1% for a year (which Alan Greenspan did from 2003-2004), how is this going to play out now that we’ve had almost a decade of 0% interest rates? Not to mention the more than $3.5 trillion of asset purchases that still sits on the Fed’s balance sheet?

If it doesn’t all add up, you’re hardly alone. Maybe it’s not designed to make sense, but rather just to confuse investors so that they don’t fully grasp what’s actually going on. Because what the Fed refuses to mention, is that the more interest rates go up, the more likely the bubbles in the stock, bond, and real estate markets are to pop. And the sooner that is to occur.

If you have any questions about what’s happening, why it’s happening, and why gold and silver are set to skyrocket as a result, contact Miles Franklin at 1-800-822-8080 or email me directly. I’m happy to explain it further.

We are rapidly approaching the time when the value of owning gold and silver will be greater than ever before. And understanding what the Fed is and is not saying has never been more important.

So if you would like to avoid a similar outcome to what so many experienced the last time the market crashed, owning precious metals in advance remains one of the best ways of doing so.

With the Fed’s latest announcement indicating that the time to buy gold or silver at anywhere near today’s prices may be quickly running out.

Chris Marcus

To buy or sell gold and silver call Miles Franklin today at (1-800-822-8080).