U.S. Interest Rates to Remain Extremely Low for a While

Gold

Gold dipped slightly overnight but found support at $1,084/oz in the early hours of yesterday morning. It has since recovered and is currently trading at $1,090 /oz. In EUR and GBP terms gold is trading at €735/oz and £659/oz respectively. The US Federal Reserve has signaled that a return to higher interest rates will not be based solely on economic recovery, but dependant also on an increase in inflation and a recovery in the employment market. They remain committed to keeping interest rates “extremely low for an extended period of time”. Meanwhile all eyes and ears will be focused on the Bank of England’s Monetary Policy Committee meeting announcement today as well as the ECB rate setting announcement and subsequent press conference. Although no changes in interest rates are expected the rhetoric will be keenly analysed for any signals of their future intentions.

Silver

Silver is currently trading at $17.39/oz, €11.72/oz and £10.52/oz.

Platinum Group Metals

Platinum is trading at $1,355/oz and rhodium at $2,000/oz. Palladium is currently trading at $329/oz.

Disclosure: No positions

Comments

[Mad Hedge F...:]

uyt First of all, let me warn you that reading this paragraph is a complete waste of your time. Still interested? There is chatter about that the Fed is considering a surprise interest rate rise at its upcoming meeting. After all, where can they go from zero, but up? They could be emboldened by the recession ending Q3 GDP of 3.5%. The bond market is certainly telling us that rates should go higher, with yields on ten year Treasuries jumping from 2.45% to 3.40% since March. Unfortunately, this is the usual kind of gibberish you get from pundits and prognosticators , who, at a loss for any explanation of the real reasons for Friday’s melt down, resort to making stuff up out of thin air. US industrial capacity utilization is terrible, while unemployment is rising to record levels. Banks still aren’t lending to small businesses, the largest job creators in the country, because they are about to get hit with an onslaught of bad commercial real estate loans. Sure, commodity prices have doubled or tripled this year. But this happened because investors were desperate for any alternative to the sickly dollar, not because there is huge underlying demand by end users. This is one of the reasons why I have been ringing the alarm bell about all long positions for the last three weeks. So I can say with complete confidence that the chances of an interest rate hike are less than zero for the foreseeable future. This discussion did have the one benefit that it did enable me to fill this space in my newsletter.

Nov 06 09:43 AM

[sorgmot:]

The Mad Hedge and Blood comments above are both on the mark.

The NYSE stock price rally is the product of zero interest rate money supplied by the FED which banks are flowing through to stock buyers.

Based on expected corporate earnings per share prospects and normal (4%) interest rates on margin loans, the stock price to earning (P/E) ratios would drop two third's which would be $4,000.00 on the industrial average.

These changed could prompt a jump in the price of gold during the coming year and a further decline in the US dollar relative to other currencies,

The USA is in a hole and the USA Congress is digging it deeper.

Good Luck

Nov 07 11:40 AM

[ManAboutDallas:]

They're not about to raise interest rates.... not at this upcoming meeting, or the one after that, or the one after that, or the one after that, or.. ... etc.... etc... ad infinitum.

When they finally do, the rest of the world will stifle a huge yawn and go about its business of doing business with each other, but not the U.S. because who wants just more Used Charmin, no matter how much it's paying?


On Nov 06 09:43 AM Mad Hedge Fund Trader wrote:

> uyt First of all, let me warn you that reading this paragraph is
> a complete waste of your time. Still interested? There is chatter
> about that the Fed is considering a surprise interest rate rise at
> its upcoming meeting. After all, where can they go from zero, but
> up? They could be emboldened by the recession ending Q3 GDP of 3.5%.
> The bond market is certainly telling us that rates should go higher,
> with yields on ten year Treasuries jumping from 2.45% to 3.40% since
> March. Unfortunately, this is the usual kind of gibberish you get
> from pundits and prognosticators , who, at a loss for any explanation
> of the real reasons for Friday’s melt down, resort to making stuff
> up out of thin air. US industrial capacity utilization is terrible,
> while unemployment is rising to record levels. Banks still aren’t
> lending to small businesses, the largest job creators in the country,
> because they are about to get hit with an onslaught of bad commercial
> real estate loans. Sure, commodity prices have doubled or tripled
> this year. But this happened because investors were desperate for
> any alternative to the sickly dollar, not because there is huge underlying
> demand by end users. This is one of the reasons why I have been ringing
> the alarm bell about all long positions for the last three weeks.
> So I can say with complete confidence that the chances of an interest
> rate hike are less than zero for the foreseeable future. This discussion
> did have the one benefit that it did enable me to fill this space
> in my newsletter.

Nov 08 06:46 PM