Fallout from FED Announcement

This is why I am always critical of our Federal Reserve Committee.

Are we that gullible that some of us believed that the FED was telling us the truth at the last FED meeting, that 4 rate hikes were in the cards in 2016? Only to come out now and say we only expect 2 rate hikes this year. I’m sorry, since low interest rates and a weaker dollar are the main driver of higher gold prices, why don’t they just come out and say they are not sure how many rates hikes will happen in 2016? BE HONEST! BECAUSE YOU REALLY DON’T KNOW. All they have to do is look out the window and they’ll see negative interest rates popping up all over the globe.

Within an hour of hearing on Wednesday that the FED was only predicting possibly 2 rate hikes instead of 4, gold rallied over $32 dollars. Everyone knows that the FED needs to be transparent and by allowing each FED governor to share their opinions (which creates uncertainties between meetings) is a terrible strategy and only causes more volatility in the markets. By the way, three FED Governors are scheduled to speak today.

Anyway, case in point, a $32 dollar rally in the price of gold and a 6 percent increase in the price of oil in AN HOUR.

Oil trading at $ 42 dollars and a stronger dollar this morning putting pressure on the yellow metal. Silver seems to be in a world of her own enjoying her sweet 16 party, but the party might just be ending soon.

So now that the excitement is over, we will let the market dictate the direction of the price of gold and not the Federal Reserve.

Have a wonderful Friday.

Disclaimer: This editorial has been prepared by Walter Pehowich of Dillon Gage Metals. This document is for information and thought-provoking purposes only and does not purport to predict or forecast actual results. It is not, and should not be regarded as investment advice or as a recommendation regarding any particular security, commodity or course of action. Opinions expressed herein are current opinions as of the date appearing in this editorial only and are subject to change without notice and cannot be attributable to Dillon Gage. Reasonable people may disagree about the opinions expressed herein. In the event any of the assumptions used herein do not come to fruition, results are likely to vary substantially. All investments entail risks. There is no guarantee that investment strategies will achieve the desired results under all market conditions and each investor should evaluate its ability to invest for a long term especially during periods of a market downturn. No part of this editorial may be reproduced in any manner, in whole or in part, without the prior written permission of Dillon Gage Metals. This information is provided with the understanding that with respect to the opinions provided herein, that you will make your own independent decision with respect to any course of action in connection herewith and as to whether such course of action is appropriate or proper based on your own judgment, and that you are capable of understanding and assessing the merits of a course of action. You may not rely on the statements contained herein. Dillon Gage Metals shall not have any liability for any damages of any kind whatsoever relating to this editorial. You should consult your advisors with respect to these areas. By posting this editorial, you acknowledge, understand and accept this disclaimer.