Gold and silver sold off sharply for much of the summer as the Fed was aggressively raising interest rates. Yet the metals have reversed that trend and rallied while the Fed has kept hiking, suggesting that the equation is not as straightforward as assuming that precious metals are going to get clobbered just because the Fed is tightening.
In fact, if you look back through history, there’s ample evidence suggesting that during some of the bigger interest rate hiking cycles, gold has performed extremely well.
So in today’s call, I talk with Greg Crennan of Golden Coast Consulting, who has studied the topic extensively, and shares what he thinks is a more realistic assessment of the relationship between gold and interest rate policy.
He also talks about the correlation between the VIX (the volatility index) and gold, and how gold often rises more so when there’s just outright fear in the market. As well as how gold doesn’t do as well during the speculative phases of the market, as investors are often allocating capital to stocks in hopes of increased gains in the markets.
Greg also comments on the recent spike in the rate at the Fed’s discount window, why he’s keeping an eye on that, and what that could imply.
So to get a better handle on the relationship between interest rates and gold, and how to put it in context going forward, click to watch this video now!