Two years ago (in September 2013), the median FOMC forecast was for the Fed Funds Rate to increase to 1% by year-end 2015 and 2% by year-end 2016. In July 2014, Fed Chairwoman Janet Yellen testified to the Senate Banking Committee that stronger than anticipated US economic data could result in the Fed making its first rate hike sooner than it originally planned. The financial mainstream media began reporting that the Fed was likely planning to begin raising rates in June 2015, but a rapidly improving US economy could force the Fed to begin raising rates as soon as March 2015.
One year ago (in September 2014), with US economic optimism reaching new heights – the FOMC raised its median Fed Funds Rate forecast for year-end 2015 to 1.375%. For year-end 2016, the FOMC raised its median Fed Funds Rate forecast to 2.875%. However, after refusing to raise rates in March and June, the Fed announced once again yesterday at its September meeting that the Fed Funds Rate will continue to be held at 0%-0.25% – using global economic volatility as its new excuse.
With only two FOMC meetings left in 2015, it is now extremely unlikely that the Fed will raise rates this year. The FOMC’s newly revised median Fed Funds Rate forecast for year-end 2015, is down to only 0.375% – a stunning 100 basis points below what the FOMC raised it to one year ago.
For year-end 2016, the FOMC revised down its median Fed Funds Rate forecast to only 1.375% – a dramatic 150 basis points below what the FOMC raised it to one year ago.
Most shocking of all and a sign of things to come – one FOMC member now forecasts a negative Fed Funds Rate of -0.125% for both year-end 2015 and year-end 2016!
For an economic recovery to be real, it needs to be strong enough to last during a period of normal interest rates in the 4%-5% range. Apparently, America’s economic recovery is so phony, fake, and fragile – the Fed is convinced that hiking rates by a miniscule 25 basis points to 0.50% – would be enough to totally destroy it!
The US Dollar is currently the most overvalued it has ever been in history – due to dumb mainstream media economists/analysts being tricked by Janet Yellen into believing that Fed Rate Hikes back to 2.88% – had been written in stone to occur within the next 24 months. They are believed that the US Dollar was guaranteed to make its biggest bull rally in history, due to their mistaken belief that the Fed was set to aggressively tighten while the ECB, BOJ, and PBOC engaged in QE.
NIA warned its members repeatedly to expect the unexpected – because literally the whole world had become bullish on the US Dollar, and from NIA’s experience it was the perfect opportunity to make a fortune by doing the opposite of everyone else. For several months leading up to yesterday’s FOMC meeting, the financial mainstream media bashed gold as the worst asset that anyone could possibly own, “knowing” (so they thought) what was about to transpire with the Fed.
In NIA’s opinion, both the US Dollar and US stock market has already peaked – while gold and gold mining shares have already seen their lows. After Thursday’s 2PMEST FOMC announcement, the Dow Jones Industrial Average (DJIA) quickly rose to an intraday peak of 16,933.43, but has since declined by a stunning 548.85 pts to finish the week down to 16,384.58! The only big winners since the FOMC announcement have been gold and gold miner shares!
Gold was trading for $1,118 per oz just prior to the FOMC announcing at 2PMEST Thursday afternoon that it will hold the Fed Funds Rate steady at a record low of 0%-0.25%. Immediately following the FOMC news, gold gained by $14 per oz to $1,132 per oz – closing near its high-of-day! Today, gold rose another $8 per oz to $1,140 per oz, for a total post FOMC decision gold rally so far of $22 per oz!
Gold currently has a massive outstanding short position that speculators must soon unwind – along with an unprecedented level of outstanding bullish bets that were recently made on the US Dollar.
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