Powell Crashing Gold, Stocks, Housing, Emerging Markets… Need I Go On?

Who slipped something into Jerome Powell’s drink? I thought the conspiracy theorists assured us the FED’s job is to prop up stocks and artificially keep interest rates low… Guess listening to wannabe FED experts is not a sustainable investing strategy!

Joking aside, this is a lesson I really want to pass on to you: When you hear an extremist who believes that the FED is out there, managing the world from behind the scenes and orchestrating crashes and recessions or hyping bubbles, know that he is giving them far too much “credit” and exaggerating their power.

I have spent more time analyzing the Federal Reserve Bank than most living people, to the point where my hedge fund manager has told me that no one he knows of has a better understanding of the subterfuge of FEDSpeak than I do (he compliments me, so I keep my funds with him… I know), but in all honesty, know the Federal Reserve is not comprised of evil people or Deep State operatives.

The Federal Reserve is in the news and in the eyes of the public and Wall Street at any given time; if anything, this would be the WORST place to do anything shady or weird.

The truth is, and I know it’s hard to hear, the FED is simply chasing trends that are not reversible; its job is to smoothen the monetary and economic impacts of said trends on America’s domestic economy and international interests, and is beholden to those interests.

There’s definitely a disservice done to concerned citizens by many alarmists, not because they’re bad people, but because they’re sincerely wrong about this matter. They spread fear that the FED can’t be this late in identifying trends, and that their mistakes are committed on purpose, but I’ve found no reason to believe that.

The FED, just like the government, is filled with people who are tasked with a job that is impossible, which is to run the most complex economic structure in human history, the United States of America.

Powell is shocked, just as many are, with the persistent inflation in the economy and, as I’ve said before, inflation is going to stay with us for a few more years, during the biggest reset of supply chains and de-globalization since 1944.

Courtesy: Zerohedge.com, Bloomberg

Gold is reacting to higher rates, as are stocks, bonds, housing and emerging markets — when the FED jacks up interest rates, it is:

• Pricing out first-time home buyers from the housing market, right when millennials ought to be purchasing… You’ll soon hear the conspiracy theorists accuse the FED of helping corporations buy America up, so everyone becomes a renter.
• Making credit more expensive, which lowers the valuations of stocks and bonds, which makes retirement more difficult for boomers, so you’ll see remarks that the FED is punishing the average 401K.

When the FED did the exact opposite, slash interest rates and let credit run loose, people were complaining about the effects of those policies.

In the end, inflation is a phenomenon that we are dealing with and the FED does what it can, but there are always victims – those who don’t adjust to new realities.

Therefore, know that gold is under pressure from rising rates, and not until the FED and the markets are convinced will we see it decisively trend higher.

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Best Regards,

Lior Gantz
President, WealthResearchGroup.com