From: GoldSilver - Tuesday Jun 25, 2019 01:48 pm
 

By Jeff Clark Senior Analyst, GoldSilver.com

It’s pretty daring to claim that you’re near certain an investment will pay off.
But that’s exactly what I’m doing. Irrespective of anything you’ve heard from Mike Maloney and his predictions about precious metals, it is my personal opinion that at some point gold (and silver) will inevitably pay off in a very big way for us.

Not only that, this catalyst has little to do with the precious metals market itself. It’s an outside force, one that may have more impact on investment and trading than any other, and will ultimately have a major impact on gold and silver as well.

Let me make my case and see what you think…

The Setup

What is the entity that cues Wall Street to make investment and trading decisions more than any other? It’s the same one that controls interest rates, money supply, and gives economic guidance.

The Federal Reserve. The central bank of the United States.

More than any other market-moving force, global investors look to the Fed and follow its signals. This includes corporations, institutions, and other governments.

The Fed has incredible sway over the economy. Its decisions impact, directly or indirectly, virtually all segments of society. It affects the economy, the banking system, the financial markets — and you and me as individual citizens and investors.

The Fed’s role is particularly important when a recession or some type of economic crisis looms. Its response to macro financial conditions can shorten a recession or lessen the impact of a crisis.

This sway comes from the tools it has at its disposal. Those tools can be very powerful. And one of them is ‘jawboning’, telegraphing to the markets what its future actions will be.

In one recent example, this past December the Fed made a statement that it had reversed course on interest rate policy, shifting from hawkish (likely to raise rates) to dovish (likely to cut rates). Mortgage rates fell, real estate markets stopped their decline, and stock markets rose. All this and more from the Fed talking. They haven’t actually cut rates at all (yet).

But how effective will this, and then the actual cutting of rates, be when the next recession or crisis hits? Herein lies where my certainty about gold begins…

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