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Tuesday, August 25, 2015

Fed's Manipulative Fingers All Over Interest Rate Uncertainty

The more I watch what has happened with the price of gold recently, which while having some strength, hasn't jumped in the way it should have under these market and economic conditions.

It's obvious investors have been holding back on plowing into gold for safety because of the manipulative comments from the Fed that is may or may not be raising interest rates in the near future.

The lack of clarity, which now has to be considered a planned move, is what has been holding the price of gold down because investors don't know whether or not there is a rate increase coming soon.

This pushes capital into bonds, which is what the government and the Fed prefer. That may last for a little while, but once the Fed makes it clear what its next move is, there will no longer be any doubt. Almost certainly the next move will be to do nothing.

Once that happens, there will be an accompanying comment that will once again darken visibility in attempts to keep money from being placed in gold.

The reason why the Fed hates that is it contradicts its cheerleaders, and brings back the narrative of the consequences throwing fiat money into the financial system has.

My belief is the Fed won't be taking any steps in regard to interest rates, as the global markets aren't through getting hammered, and with China, Japan and Asia in general struggling, along with Canada and Australia, there is little in the way of positive catalysts to signify ongoing growth.

The slow growth projections of the U.S. economy confirm this.

With a lot of cash on the sidelines as well, I believe it's getting ready to be invested in gold once the central bank signals where it's taking interest rates.

By making investors wait, it's further generating pent-up demand, which when released, may even be stronger than believed at this time.

If it goes the other way and interest rates are increased, I see that as a temporary pause. The global economy is grinding to a halt, and there is no way the U.S. economy can maintain the slow growth way it's now enduring, with consumer spending. 

One way or the other gold prices are going to rise, and I don't think it's going to be a long time into the future, whether the Fed raises interest rates or not.

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