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pencilvanian
1000+ Penny Miser Member
USA
2209 Posts |
 Posted - 06/10/2008 : 19:14:11
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From NBR Nightly Business Report-
Bernake and the Fed are now talking tough about getting inflation under control
(what took them so long?  )
Wall Street is delighted by the news and is factoring in the Fed's move to strengthen the US Dollar via interest rate hikes.
There was an old saying that goes something like this-
When rates are low, stocks will grow
When rates are high, stocks will fry
Gold and silver will also be effected by the increase in interest rates, but how much or how little remains to be seen.
A spike in interest rates the way Volker did it back in 1980 is not likely since no one in the Fed wants to push the nation into deep recession. Gradual increases in interest rates will give the appearance that the Fed is fighting inflation-
-government calculated inflation that is. Real life inflation (cost of food and oil) will notbe brought down by the Fed's meager interest rate hikes.
The appearance of higher interest rates will press down on gold and silver prices, giving buyers of gold and silver the opportunity to buy more for less.
If you see the price of your favorite PM go down in the weeks and months ahead this is the reason, the perception that the Fed is doing something to contain inflation is all that is needed to cause a rally in the dollar, perception, not facts or hard evidence, but perception, and since Wall Street lives by illusion and appearances perception is all they will need to talk up the dollar and stocks.
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horgad
1000+ Penny Miser Member
USA
1641 Posts |
Posted - 06/13/2008 : 07:24:47
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| The Feds have talked tough before about the dollar and did nothing. Will this time be any different? Beats me, but right now I am betting that no it won't be any different... |
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Tourney64
1000+ Penny Miser Member
USA
1035 Posts |
Posted - 06/13/2008 : 08:37:18
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I don't think there will be any change in interest rates for a few months. Jobs is also a concern, and interest rate increases will hurt job growth.
As stated in the article - oil prices are having an inflationary effect on the economy and interest rate changes will have little impact on inflation. Showing that we will do what is necessary to improve the US oil supply will have a more significant impact on inflation than raising interest rates. The US $ is only down 5.5% vs. the Euro this year. Oil has increased 42.5%, yet the main reason given that oil has increased is the weak US $. What's the other 37% (42.5 - 5.5) increase from then?
Gold and silver are dropping and do look like better buys right now. Do it while you can. |
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swusc
Penny Hoarding Member
USA
553 Posts |
Posted - 06/13/2008 : 21:30:56
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I don't know if say the dollar isn't weak due to the EURO exchange is the factor.
The dollar is weak compared to say early 2000s and net exporters of goods to the U.S. have a lot of U.S. Dollar reserves. Why should they keep adding to them with the dollar dropping? Why not use those dollars to buy oil (oil is quoted in dollars so their is no exchange rate effect from buying oil). That has increased the demand for oil. Anyone got a report showing how much of a stock pile India and china have in oil reserves?
Those OPEC (dollar holders now) countries have made a few big investments in U.S. companies, but I would guess most of the reserves are in U.S. treasuries so the dollars can earn interest.
Rates are rising though You must be logged in to see this link. across the yield curve. People are wanting a higher return to hold treasuries.
-SWUSC |
`Everybody is ignorant. Only on different subjects.' Will Rogers
"This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the "hidden" confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard." Alan Greenspan, 1966. |
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Bernake, the buck, bullion and NBR
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