LOS ANGELES, June 1, 2016 /PRNewswire/ -- Based on recent statements by regional Federal Reserve Bank presidents, the Fed may raise interest rates as early as June. Such a move, which was formerly predicted to occur later in the year, would likely see short-term rates rise by .25 percent as part of the Fed's overall strategy to tighten monetary policy. Financial markets are already reacting negatively to the news, which is bad for holders of traditional stocks but bodes well for gold.
On May 17, San Francisco Fed President John Williams joined fellow regional presidents Dennis Lockhart (Atlanta), William C. Dudley (New York), Robert Kaplan (Dallas) and Eric Rosengren (Boston) in voicing support for an earlier-than-expected hike in rates. Williams cited April's solid job growth numbers and a relatively strong US economy as reasons to roll out higher interest rates, saying the markets could withstand the change.
However, investors seem to have a different view on the issue and began a selloff that sent the Dow Jones Industrial Average down 1% and the Nasdaq down 1.3% in the immediate aftermath of Williams' remarks. The dollar also suffered losses against the Yen and Euro, while precious metals values dipped as well.
"The markets clearly don't share Williams' confidence in pursuing interest rate hikes right now," says Orkan Ozkan, CEO of precious metals firm American Bullion. "We're witnessing declining values across the board, which indicates that a Fed move towards higher rates could actually backfire and prove harmful to the market and economy."
If the Fed proceeds as expected, Ozkan sees gold emerging as the eventual winner.
"Gold will remain a safe haven for investors worried about global economic instability in the wake of higher rates," explains Ozkan. "Just as gold and silver prices rallied after initial losses following the last rate hike in December 2015, we anticipate precious metals to resume their upward trend and then continue in the right direction regardless of the Fed's actions. In our opinion, this is a very good time to buy gold bullion for portfolio diversification or precious metals IRAs."
Investors interested in exploring gold or silver purchasing options for their Individual Retirement Accounts ahead of the June Fed meeting and possible interest rate increases are invited to visit AmericanBullion.com today for more information.
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SOURCE American Bullion