No Matter What the Fed Chooses: Choose Gold

2.10.23 - No Matter What the Fed Chooses: Choose Gold

Gold last traded at $1,861 an ounce. Silver at $22.03 an ounce.

Gold - Poised to Benefit No Matter Which Path the Fed Chooses -Yahoo! Finance

All investment markets are predictive mechanisms - crystal balls, if you will, that discount future events by pricing assets today. But even though every market attempts to anticipate the future, none seem to do it as well as gold, asserts junior gold mining expert Brien Lundin, editor of Gold Newsletter.

With that said, gold is now looking ahead. And what it sees depends upon the success of the Fed's battle against inflation. In fact, I believe it's fair to say that the Fed is facing an historic turning point - a credibility crossroads from which it will be forced into one of two paths. And while both of these paths are bullish for gold, one is much more so.

The Crossroads

Fed Chairman Jerome Powell and his compadres at the central bank have been remarkably determined to put the inflation genie back in its bottle. They know the lesson taught by Paul Volcker in the 1970s: If you don't kill it off completely, it will raise its ugly head again and again.

That said, they have yet to confront the three factors that I feel will prevent them from pursuing this tightening policy much longer:

1) The cost of servicing today's massive federal debt.

2) The recession.

3) Something breaking.

One of these factors, and perhaps something I haven't considered, will force the Fed to halt its rate-hike crusade. Accepting that, if we step back and consider the big picture, there are two possible scenarios ahead