news.goldseek.com / By: Stewart Thomson / 20 September 2016
- The world is about 24 hours away from key BOJ and Fed meetings that could create a sea change in global markets.
- Please click here now. Double-click to enlarge. This daily bars gold chart shows gold drifting majestically in a rectangular pattern.
- Strong handed gold investors don’t appear to be worried about the BOJ and Fed meetings, and with good reason; a rate hike from the Fed would create panic in the stock market, and investors would flock to gold, just as they did after the first rate hike in December.
- If the BOJ announces deeper negative rates, that’s also good news for gold, from a competitive cost of carry perspective.
- If the BOJ announces “operation twist”, where it buys more short term bonds than long term bonds, institutional money managers will view that as inflationary because it boosts bank lending. That’s more good news for gold.
- Indian festival buying is also now in play, and demand is likely quite a bit higher there than official numbers indicate, due to the rise of the black market’s share of the market.
- That festival demand is likely a big reason why gold feels so firm.
- When the Fed hiked rates last December, gold stocks and the US stock market sold off temporarily, and then a huge rally began.
- If the Fed hikes rates tomorrow, I would suggest that both the stock market and gold stocks will fall again, but it’s likely that only gold stocks recover quickly this time.The bottom line: