On November 14th, NIA said, "The primary reason for gold trading far below its current fair value of $3,865.83 per oz is the largest stock market bubble in history due to Federal Reserve Chairman Jerome Powell putting his personal job security over the health of the U.S. economy. By continuing to hold the Federal Funds Rate at only 0.08% even as U.S. price inflation spirals out of control and many global central banks begin to hike rates, U.S. Corporate Equities have become the largest bubble in world history reaching a new record high equal to 213.23% of U.S. Gross Domestic Product. Soon, the Federal Reserve will be forced to admit that U.S. price inflation is not transitory and it will begin to rapidly hike the Federal Funds Rate in a desperate attempt to prevent hyperinflation. Although nominal stock market values may not crash by 90%, stock market values will crash by 90% when priced in gold."
Exactly like NIA expected, as soon as Powell got renominated to his position, his tone totally changed. Not only has Powell admitted that U.S. price inflation is not transitory, but he has retired the word transitory from his vocabulary. Official odds of a Federal Reserve rate hike in March have soared from 10% one month ago, to 18.8% one week ago, to 27.9% today. The NASDAQ has plunged by 7% from its November 22nd high while Bitcoin is down by 18% from its November 21st high.
Historically, when the Federal Reserve raises rates from artificially low levels, gold rallies big 100% of the time. During the last five rate hike cycles from artificially low levels of less than 5%, gold on average has rallied by 195.25%!
February 1972-December 1974: Fed Funds Rate increased from 3.29% to 12.92% while gold rose from $48.40 per oz to $186.50 per oz for a gain of 285.33%.
January 1977-April 1980: Fed Funds Rate increased from 4.61% to 17.61% while gold rose from $132.10 per oz to $850 per oz for a gain of 543.45%.
December 1992-April 1995: Fed Funds Rate increased from 2.92% to 6.05% while gold rose from $332.90 per oz to $405.60 per oz for a gain of 21.84%.
December 2015-July 2019: Fed Funds Rate increased from 0.25% to 2.50% while gold rose from $1,050 per oz to $1,440 per oz for a gain of 37.14%.
The #1 way to capitalize on rising gold prices in 2022 is with North Peak Resources (TSXV: NPR).
Past performance is not an indicator of future returns. NIA is not an investment advisor and does not provide investment advice. Always do your own research and make your own investment decisions. This message is not a solicitation or recommendation to buy, sell, or hold securities. NIA's President has purchased 200,000 shares of NPR in the open market. This message is meant for informational and educational purposes only and does not provide investment advice.