Gold & Silver “Sell Off” As The Fed “Hikes” Rates For The 8th Time Since December, 2015

The Fed just hiked rates. Here are the FOMC details plus gold, silver and the dollar’s reaction. Also watch the Powell press conference right here…

What comes as a surprise to nobody is that the Fed has just raised its Fed Funds Rate 25 basis points, from 1.75% – 2.0% to 2.0% – 2.25%. This is the 8th time the Fed has “hiked” rates since they began this most recent cycle in December of 2015.

I use the word “hike” in quotes because it is really an insult to the word “hike”. Usually, when you “hike” something, it does not mean by an itsy bitsy tiny bit. “Hike” means you jack that sucker up, bigly!

Regardless, the Fed has hiked, and now the mainstream financial press gets to take turns placing whiffle balls on the tee for Fed Head Powell.

If you are in the need of inducing vomiting, for whatever reason, you can tune in to the press conference in its entirety below:


But, “Hey Half Dollar, why are you so hard on the Fed?”.

Good question.

You see, the Fed is an illegitimate institution that publicly states its plan is to kill the US dollar at a rate of 2% per year. Additionally, and more importantly, the debt-based fiat currency “notes” they shove down our throats and force us to use are Unconstitutional, yet they have the MSM cheer-leading them on 24/7, and myriad apologists saying how to make the Fed “better”, as well as politicians who enable this scam.

I’m really not saying anything that say, oh, Ron Paul wouldn’t say, It is only that my life experiences up to this point have created a new breed of Fed abolitionist if you will.

And believe me – I refrain from saying how I really feel about the Fed at times.

But I digress.

Back on track.

Earlier today I wrote that I was looking for a “tale of two halves”, meaning pressure on gold & silver in the first half of the day, followed by a move higher post-FOMC.

So far, the knee jerk reaction is falling in line with my expectations:

The knee jerk reaction is not always the final direction of the move, however, so I’m not counting any of these chickens before they hatch.

We’ll revisit the charts in a moment as the direction comes into view, so first, a little about today’s FOMC, from Bloomberg:

The quarter-point increase boosted the benchmark federal funds rate to a target range of 2 percent to 2.25 percent. The move reflected an upbeat assessment of the economy that was identical to the central bank’s last policy statement eight weeks ago, despite concerns over Trump’s escalating trade war.

Growth and job gains have been “strong” and inflation remains near the central bank’s 2 percent target, the Federal Open Market Committee said in its statement Wednesday following a two-day meeting in Washington.

Barring a negative surprise in the economy, updated “dot plot” forecasts made a December rate hike almost certain, as the number of FOMC officials expecting another increase by year-end grew to a bigger majority of 12, from eight in the previous round of projections in June.

 

In the statement’s only change from the previous one issued Aug. 1, the committee dropped its long-standing description of monetary policy as “accommodative.” That’s an acknowledgment rates have moved closer to the neutral level which neither boosts nor restrains the economy.

Fed Chairman Jerome Powell and his colleagues are trying to pull off a feat the central bank has accomplished only once in its 104-year history: Engineer a soft landing of the economy by raising rates just enough to prevent overheating, but not so much that they trigger a recession.

Here’s a look at the changes to this month’s FOMC:

What is the take-away from this most recent FOMC?

The Fed is “hawkish”.

On the surface anyway.

Powell still has to sit through the questioning from the mainstream financial press, though one doesn’t get to be Fed Head without mastering FedSpeak, so the chances of Powell sticking his foot in his mouth are small.

Twenty minutes in, we see gold and silver consolidating tiny gains, and the dollar dropped and then popped:

 

What can be said of a “hawkish” Fed?

The perception is that the US economy is booming and the Fed is raising rates because the economy is strong enough that it no longer needs to be “accomodative” with its monetary policy. This could be initially interpreted by the investing public as being “good for the dollar”. If it is interpreted as such, we could see the relief rally in the dollar index I mentioned earlier today.

That said if there is a relief rally in the dollar, there would likely be continued pressure put on gold & silver. By pressure I mean we could see sub-$1200 gold and sub-$14 until the relief rally is over, but I really think downside is limited here. In fact, my call is that I’m looking for the metals to close higher this week than last week.

Thirty minutes in we see gold & silver have round-tripped to “unch”:

In fact, might even be a nice little dip-buyin’ opportunity:

Looks like gold & silver are on sale to me.

Powell has now stepped-up to the (tee-ball) plate for those so inclined to suffer through the presser.

Stack accordingly…

– Half Dollar


 

About the Author

U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.

Paul’s free book Gold & Silver 2.0: Tales from the Crypto can be found in the usual places like Amazon, Apple iBooks & Google Play, or online at PaulEberhart.com. Paul’s Twitter is @Paul_Eberhart.

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