Quick! Buy Gold "Before the Fed Hikes Rates"

[The Machine]

 

 

So says this review of historical data, at least...

 

SIMPLE logic would tell you to sell gold when the Federal Reserve raises rates... not to buy it, writes Steve Sjuggerud in his Daily Wealth email.

 

But the truth is, based on history, the price of gold actually soars in the 12 months before the Federal Reserve raises interest rates.

 

Chances are the Fed will raise interest rates in 2015...so we are in that 12-month period right now. (I explained why rates will likely rise next year in this recent DailyWealth.)

 

I know today's message will surprise you. But we have a fantastic opportunity to buy gold today, before the Fed hikes rates.

 

Logically, gold should do well when interest rates are near zero – not when the Fed is raising interest rates. But history shows that's not actually the case.

 

You see, when rates are near zero, there's no penalty for owning gold (which pays you no interest). When interest rates rise, on the other hand, you're giving up a potential yield on your money in order to hold gold. That yield should discourage gold demand and hurt gold prices.

 

The problem is, markets don't always work based on simple logic. And in the case of gold, rising rates actually gives us a fantastic opportunity.

 

We sized up over 40 years' worth of data. We looked at all the times when the US moved from periods of low or falling rates into periods of rising rates.

 

History shows that the biggest gains in gold come roughly one year BEFORE the Fed raises rates.

 

The numbers get a little crazy. But they're absolutely true. The table below has the full details...

 

 

As you can see, buying gold one year before the Fed raises rates leads to massive gains.

 

One year before rates rise, gold increases 20%, based on history...crushing the "buy-and-hold" one-year gain. And most of the gains come in the first six months, as the table shows.

 

In short, we want to own gold before and as the Fed raises rates.

 

The Fed will almost certainly raise interest rates in 2015. So we want to own gold today.

 

I know this will seem illogical and backward to many investors. Rising rates "should" hurt gold. But history tells a different story.

 

With rising rates on the way next year, gold is in a prime situation to soar.

[gymrat76541]

Gold is on my "wish list" for when this RV's!

 

Right now it is that thing "rich folks can afford" that I can not!

[Hooter]

Gold is on my "wish list" for when this RV's!

 

Right now it is that thing "rich folks can afford" that I can not!

 

try silver

[shydude]

Silver b4 Rv turns into Gold after RV.... I can live with that

[gymrat76541]

My precious metals consist of a box I stick 1/2 dollars and silver dollars in when I find them at the stores!

 

Not counting my lead in the bullets! I hear even that will change shortly!

[The Machine]

My precious metals consist of a box I stick 1/2 dollars and silver dollars in when I find them at the stores!

 

Not counting my lead in the bullets! I hear even that will change shortly!

 

 

Like I say to most people, buy or hoard only what you can afford, there is no fixed mount that fits everyone's wallet.

 

every little bit counts.