With the Federal Reserve set to hold its last policy meeting of the year next week, the speculation has been that it will slow down the pace of interest rate increases. With the financial markets now pricing in an even higher probability that the Fed might even pause at the December meeting.
“Investors currently see a 73.2% chance of a rate hike following the December Fed meeting, according to the CME. Just one week ago, the probability for a rate hike on December 19 was at 84.4%.”
While a hike next week is still more likely than not, it is interesting to see the change in pricing. With the markets also reflecting a less aggressive than previously expected pace for 2019.
Although consensus among economists remains in favor for a rate hike in December, some are beginning to lower estimates for 2019.
Goldman Sachs initially forecasted four rate hikes next year and still estimated that there is a 90% probability for a rate hike in this month, but now predicts a less than 50% chance of a rate increase in March.
So with increasing uncertainty surrounding the Fed’s glacial tightening path, what can we count on from the Fed next week?
In reality, whether the Fed hikes or pauses, it has to on some level be realizing the corner that it long ago backed itself into. And that there is no easy way out now.
At this point, the Fed can continue to raise rates and watch the stock, bond, and real estate markets continue to deteriorate. Or it can resort back to it’s long-held strategy of running the printing presses to once again try and cover up the malinvestment.
Giving the commentary out of the Fed over the past few weeks, it seems like it will choose the latter. Which is hardly surprising. And interesting in the sense that the markets are beginning to price it in.
That gold and silver have not moved substantially on this news is likely a reflection of the manipulation that has been documented in court, yet continues to occur. Which does not mean that it will go on forever. But rather for those looking to invest, the fact that more money printing is on the way, while that has yet to be reflected in the price of precious metals, just makes the idea of investing in gold and silver all the more appealing.
The last decade of the financial markets has created a challenging environment for investors. Where many correctly grasp what’s going on and place trades accordingly, only to not see the prices react.
Yet as the collapse of the subprime bubble demonstrated over a decade ago, while sometimes the markets can seem slow in reacting, when they do, they eventually account for all of these developments that have not been reflected in the price.
So if you’re watching the stock market volatility and thinking about selling before the bubble collapses further, and looking for an asset class that still allows you to buy at low levels, look no further than gold and silver.
P.S. If you have any questions about this article, what’s happening with the Fed, or the precious metals market, you’re welcome as always to email me here.
-To buy or sell gold and silver call Miles Franklin today at (1-800-822-8080).
-Or get Miles Franklin’s detailed report on why the price of silver is set to explode.