What Effect Interest Rates

Soggy Dollars

There’s this article, saying rising rates are good for gold. It repeats two old errors: gold goes up, and things that cause it (e.g. a collapsing paper currency) are “good”. We have recently been emphasizing that interest does not correlate well with the price of gold. If you want to speculate on the gold price, rising rates may not be a good trading signal.

Pure Gold

Please forgive us once, the sin of linking an article by our own Keith Weiner. Keith argues that Yellen is fighting the tide with her rate hike, and will have to take it back. The worldwide megatrend is down, down.

3 replies
  1. bbartlow says:

    12/23… and another dip in the GSR. “Unsustainable” says the basis! “Impossible” says the cobasis! “Mere speculators” says our ‘BasisBuddy’!

    While those pithy statements may be true, i’ve been doing my personal best to offset the futures and ETF tax loss liquidation by buying phyz. And I know I’m not alone.

    Perspective: Don’t forget, the GSR did hit 81 in late August, very close to projections we’ve read here for 83:1. So I don’t think any of us will think any less of the analysis here for missing the objective by 2.5%, if 81 turns out to be the high by some stroke of luck.

    Since the GSR has yet to even take out last week’s low, the next few days should be pivotal, with either a continuation lower or a sudden reversal higher… back in the direction of the major trend.

    As a trader, I suspect today’s relative strength in silver had to do with the news out of China and the strength in other industrial metal stocks like FCX, BHP, etc. At a minimum it suggests that bulls need more confirmation than a news generated (relative) rally.

    If the GSR is destined to head higher, however, silver should show relative weakness as soon as tonight’s London session. If silver can’t continue to trade below $14.20 — and eventually $14.00, silver bulls might have something to cheer about in 2016.

    As I said in earlier posts, I am not committed to either GSR scenario. Baring an all out deflationary scenario, I continue to believe this is an historic opportunity to be buyers of either metal. But always keep some powder dry, gents. You never want to be caught without some cash… and preferably lots of it. If deflation continues cash will be king. But once inflation takes hold and psychology reverses, your metals will skyrocket and your remaining ‘cash will be trash’.

    Don’t worry about identifying that turn of events…. it’ll be quite obvious.

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