May 2nd 2023
Today is April 13th, which means that in just over two weeks from now, the FED will announce its next policy decision.
Each market force, from institutional to governmental, believes that if the FED chooses to pursue another rate hike, which will take us to 5.00%-5.25%, it will be the last.
FINALLY, finally, finally… after eighteen months of uncertainty, as to how many rate hikes this tightening cycle will undergo and how high interest rates will go, the whole world will have its answer.
This is a joyous and blissful moment, because we can all stop HEDGING and resume investing.
When the Federal Reserve jacks up interest rates, most investors treat them as body blows. They are protecting themselves…
They invest less, hoard cash, earn income in short-dated bonds (2 to 6 months), short the indices, exit positions and trim expenses.
It’s as if your father or mother are telling you that you’ve gone wild and now it’s time to educate you properly and teach you a lesson. Your mind immediately goes into survival mode.
At first, you refuse to believe it… tough love, and you say to yourself, “They will never go through with it.” Then, lo and behold, they begin to implement these new rules and you see a whole new side of them. “Surely, they won’t inflict real damage to my life,” you reason, but then they tell you that you can’t go to that social gathering and you understand they mean business.
For most of my adult life (2006-2021), all I heard is the FED is the market’s friend, there to oversee the bulls win – but it isn’t.
It was a false analysis and I’m glad that I never bought into it.
The funny thing is that now the FED is portrayed as the opposite; now, when you ask, critics tell you that it wants to “crash the markets,” and won’t stop until everyone begs it to.
The Federal Reserve raised interest rates far higher than I had originally expected. My initial goal was 2.25% and I thought they’d pause there, but they didn’t even blink and raised right through that.
That was when I knew they’re going to keep hiking until something breaks.
The limits must be tested and they have been.
The hedge funds are short the S&P 500 to a degree that is not normally maintained for extended periods.
After the IMF cut its GDP forecast, it’s clear that the consensus is recession.
93% Of Investors Generate Annual Returns, Which Barely Beat Inflation.
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And, if the FED ceased its rate hikes and we are opening the door to recessionary forces, then the FED will be cutting into drama. This isn’t the best scenario for real estate or for equities, but it’s a cause for celebration for gold.
Following the tech bust and 9/11, Alan Greenspan slashed interest rates and birthed the last big precious metals/commodities bull market, and something similar will commence in July, or September at the latest, when the FED begins slashing.
This chart is clear. Gold is going higher. My initial analysis is that we are going to experience a 15% move, taking us to $2,300/oz.
Hope you bought a first-class ticket for this flight, because the onboard entertainment will be amazing.
Governments Have Amassed ungodly Debt Piles and Have Promised Retirees Unreasonable Amounts of Entitlements, Not In Line with Income Tax Collections. The House of Cards Is Set To Be Worse than 2008! Rising Interest Rates Can Topple The Fiat Monetary Structure, Leaving Investors with Less Than Half of Their Equity Intact!
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