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How To Play The Fed’s Rate Hike Bluff – Jim Grant

(Kitco News) -The Fed is bluffing, and no matter what happens with interest rates, it might be best for investors to stick with gold, this according to one widely known Fed critic and Wall Street pundit.

“I think that [the Federal Reserve] missed their mark. They should have raised rates by now,” Jim Grant, publisher of popular newsletter Grant’s Interest Rate Observer, told Kitco News.

And, as markets continue to be stuck in what appears to be monetary-policy limbo, Grant said he thinks “the solution for investors lies in gold.”

The yellow metal has gotten a boost recently as the likelihood of a U.S. rate hike has fallen. After the release of weak labor data last week, markets are only pricing in a 15% chance of a hike in September. Meanwhile, gold futures have risen almost $50 since last week’s lows, with December Comex gold futures last at $1,349.40 an ounce, down 0.34% on the day.

However, despite the seeming relationship between gold prices and tightening expectations, Grant argued that the yellow metal will not be driven by the Fed’s next policy move. Instead, “it’s the revelation that we’re walking – or running – down the wrong path, and that we must regroup and formulate a monetary policy that’s based upon a lasting standard of value.”

Current central bank policies will either “end in tears” or “laughter,” he continued, depending on how investors position themselves; and, according to Grant, gold is the safest bet.

“I think a bet on gold, to me, is actually an investment in monetary disorder. It’s not a hedge against it because we have monetary disorder,” he said.

“I think what us, gold bugs are waiting for is the spreading perception that we have monetary disorder.”

By Sarah Benali of Kitco News;



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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