Park Avenue Numismatics
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9.1.26 - The Fed's Pickle, Gold, and Silver
9.1.26 - The Fed's Pickle, Gold, and Silver
Gold last traded at $4,329 an ounce. Silver at $64.10 an ounce.
The Fed's Pickle, Gold, and Silver -Daily Reckoning
On Friday, Fed Chair Kevin Warsh spooked precious metals with his "hawkish" commentary.
Both gold and silver fell around 3% following the Fed's press conference.
Warsh talked tough about inflation, leading to fears of interest rate hikes.
According to many financial commentators, interest rate hikes are bad for precious metals. After all, there's no yield on bullion. So the modern view says that when yields go up, it makes bonds and CDs more attractive, and gold and silver less so.
But in reality, the relationship isn't nearly so clean. See the chart below, which covers the period from 1970-1980. It shows U.S. 10-year bond yields on top, and the price of silver below.
