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"Does The Fed Lie, Or Is It Really Stupid?" - Gerald Celente

(Kitco News) - After successfully boosting global equity markets with countless trillions of dollars, are central banks finally admitting their policies are failing?  

“Indeed, central banks are caught in a rate trap,” said Gerald Celente, founder of the popular newsletter Trends Journal.

“If they raise rates, already slowing economies will further recede while stock markets and housing sectors relying on cheap money will falter. Should central banks lower rates, they risk currency depreciation and money outflows,” he told Kitco News on Wednesday afternoon.

Celente pointed to the Bank of Japan, “despite high expectations that the BOJ would stimulate its nation’s foundering economy by driving interest rates further into negative territory, and that Prime Minister Shinzo Abe would fire his third Abenomic stimulus arrow, both missed the target. On the news that the BOJ held rates and the stimulus arrow was far smaller than markets anticipated, the NIKKEI trended closer to bear territory and Asian markets moved lower.”

Celente said he is also critical of the U.S. Federal Reserve. New York Fed President William Dudley said Sunday that the U.S. central bank should be cautious before raising rates.

“This is the same Dudley, who back in May declared that because the U.S. economy was strong, he believed ‘a tightening in the summer, the June-July timeframe, is a reasonable expectation,’” Celente said.

“When Dudley joined the chorus of Fed officials championing interest-rate increases last spring, gold prices quickly sunk to the low $1,200-an-ounce range in anticipation of higher rates and a stronger dollar. Now, with gold up over $150 an ounce since then, and trends for low interest rates to persist, we maintain our forecast that when gold breaks strongly above $1,400 per ounce, it will spike toward $2,000.”

Celente’s comments came ahead of the Bank of England’s decision to cut interest rates to a record low of 0.25% in an effort to prop up its stumbling economy post-Brexit. Along with cutting interest rates and restarting a £10 billion corporate bond-purchase program, the BOE also drastically cut its growth forecast for 2017 to only 0.8%, down from its previous estimate of 2.3%.

Gold prices are trading just below session highs Thursday morning with December Comex gold futures last trading at $1,368.80 an ounce, up $4.10 on the day.

By Daniela Cambone of Kitco News; dcambone@kitco.com

 

 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.
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