Warshian Gold
By Doug Hornig
The Paydirt book editor is back with an installment on gold’s reaction to the Fed rate hike. There’s an important message here for gold and gold stock investors…
Will he or won’t he?
That’s been the question bedeviling Wall St. Referring, of course, to the question of whether new Fed Chair Kevin Warsh would defy his patron and announce a hike of the Fed funds rate at the September FOMC meeting.
He will.
Warsh is Just Following the Trend
At 2 p.m. on 9/16, Warsh proclaimed a quarter-point tightening, a move that usually injects pure strychnine into the gold market. Sure enough, the gold price immediately plunged from $4404/oz. to $4286/oz. in just the next hour and a half. And then … but more about that in a moment.
First, what other forces are impinging on the gold market as I write on September 22?
Remember that the Fed only sets the overnight funds rate. Other rates do tend to follow, but the long-term bond market is its own beast, and it’s been howling for six years now.
In 2020, the four-decade long bull market in bonds decisively turned. It’s been a bear market ever
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