Is the Federal Reserve heading to zero and beyond?
The market certainly thinks that zero percent interest rates and perhaps even subzero rates are in the central bank’s future. Since there is weakness building in the United States and the rest of the world, the Fed is taking a preventive approach as it tries to reverse the slowdown.
This is great for gold, says Citibank.
Analysts at the financial institution believe that if the Fed drops rates to zero then gold could spike to $2,000 an ounce. This would top the 2011 record high of $1,921.
“We expect spot gold prices to trade stronger for longer, possibly breaching $2,000 an ounce and posting new cyclical highs at some point in the next year or two.”
Right now, gold prices are hovering around $1,500, enjoying 18% gains on the year. Silver is also recording double-digit gains year-to-date.
Whether it is a recession or monetary intervention, it is a great time to own gold.
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