Here we go again…
The Federal Reserve is threatening to raise interest rates again.
This time, they tell us, the rate hike could come as soon as June.
This has gold investors worried…
“Gold slides on Fed rate hike expectations,” read a headline on CNBC.com [on Thursday].
[ad#Google Adsense 336×280-IA]Should you worry?
In short, no…
The last time the Federal Reserve raised rates was from 2004 to 2006.
Rates went from 1% all the way to 5.25%.
If gold was truly affected by the Fed raising interest rates, then you would think that the dramatic move we saw from 2004 to 2006 would have a devastating effect on the gold price… right?
You’d be wrong. Gold was unaffected. Its price just kept going up while the Fed was raising interest rates. Take a look:
Specifically, exactly one year after the Fed’s first interest-rate hike in 2004, gold prices were up more than 10%.
The story was the same the previous time the Fed started hiking rates… in 1999. One year after the Fed started hiking interest rates, the price of gold was up more than 10%.
Just because gold went up 10%-plus in a year the last two times the Fed raised interest rates doesn’t mean that it has to happen again…
We can’t say that gold will go up 10% or more. But we can say you shouldn’t worry so much about the Fed right now.
The last time the Fed started raising interest rates, gold was in a bull market. And higher rates didn’t hurt gold.
Today, I believe we’re in a new bull market in gold – one that would also be unaffected by interest-rate hikes by the Federal Reserve, just like we saw from 2004 to 2006.
Look, the media might try to spook you about gold and the Fed in the coming weeks…
Pay no attention to it… You know the truth. Gold doesn’t care about the Fed, especially when gold is in a bull market.
Good investing,
Steve
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Source: Daily Wealth