The Federal Reserve has decided to increase interest rates an additional 0.25%, bringing the Federal Funds Rate to a range of 5.0-5.25%. This is the steepest increase in the shortest amount of time, with ten rate hikes in the last 15 months.
Gold and silver are higher on the news and for the week, with gold up 1.2% to $2,040 and silver up 0.5% to $25.75. Platinum is 4.2% lower at $1,067, and palladium is down 10% to $1,470.
Since a year ago today, gold is 9.2% higher, silver is up 14%, and platinum is up 11%. Palladium is down 35% from a year ago today.
Markets are under pressure, with a recession either imminent, already in effect or expected soon.
Recessions are often not good for stocks and commercial real estate but are often good for gold and silver.
Looking back to the past eight recessions since 1968, gold has moved higher in 6/8 recessions. The average return for gold in the previous eight recessions is 13% when measured from the beginning to the end of each recession.
Add in stagflationary conditions (like today), and gold has increased 6-8 fold. Similar results today would mean $6,000-$8,000 gold in 3-4 years.