Exclusive Interviews

JAMES RICKARDS : Will Gold Pop When The Fed Throws In The Towel?

James Rickards, Author of The Road to Ruin

The prospects of a Santa Claus rally faded and the doom and gloom on Wall Street hinted at a big lump of coal in investors’ stockings. The final days of 2018 could bring wild swings at a time that is usually quiet and light on volume; but the writing may already be on the wall.

During the final full trading week of the year, the Federal Reserve hiked interest rates as widely expected. The target range for the benchmark funds rate was raised by 25 basis points to 2.25 – 2.5%. The central bank forecast two more rate hikes in 2019 and pulled back from the previously projected three hikes. The Fed cut its growth forecast and lowered the long-run funds rate outlook.

Many questioned the Fed’s logic that it is data-dependent. Plenty of dialogue and criticism regarding the FOMC’s reasoning swirled like a snowstorm in the days following the Fed announcement. Based on the data, how could the central bank forecast two hikes in 2019?

At the end of the final full trading week of 2018 U.S. markets got a boost as New York Fed President John Williams said the central bank could reassess its view on the economy in 2019. But those gains were short-lived as the major equity averages reversed course and headed back into negative territory.

Jim Rickards joined me at the NASDAQ MarketSite in the aftermath of the Federal Reserve announcement and just as Fed Chairman Jerome Powell commenced the press conference. Keep a close eye on the monitors in the background. You’ll notice the quick shift in the equity averages — going from green to red in just a matter of minutes.
Rickards and I covered plenty of ground in the interview segments. It doesn’t take a stealthy sleuth to figure out the chronology of the interviews. Towards the end of the last interview you’ll notice that the Dow Jones Industrial Average, S&P 500 and the NASDAQ Composite Index are deep in negative territory and down at least 1.5%. That’s quite the decline within a few short minutes.
There has also been a lot of chatter about the impact of President Trump’s tweets on the markets and the direction of the Federal Reserve. Rickards gave us his take on the tug of war between the broader market and the political sphere in Washington D.C. He offers his take on the “pause factors” that would affect the FOMC’s policy trajectory.
Interview segment with Jim Rickards taped on December 19, 2018: CLICK HERE.
It was a volatile year across all markets and precious metals were no exception. The yellow metal is improving and is about to close out its best quarter in almost two years. Sentiment for the traditional safe haven has slowly gained traction following its bottom this summer.
At a time when returns on most asset classes are dismal and performance in futures and ETFs are less-than-stellar, many are left asking why support for gold hasn’t been as strong.
Rickards says gold is “defying headwinds right now but watch what happens when headwinds turn into tailwinds.”
Rickards reflected on the performance of spot gold prices in a tweet:

What’s interesting about gold is that it’s not spiking or surging it’s just slowly chugging higher like the little engine that could. $1,180/oz to $1,245/oz (+5.5%) in ten weeks. “I think I can, I think I can….”

— Jim Rickards (@JamesGRickards) December 7, 2018

In the current political and geopolitical landscape there are more headwinds than tailwinds being monitored. Uncertainty over the outcome of the U.S.-China trade war at the end of the 90-day truce combined with the potential of a partial government shutdown do little to boost prospects for growth in the New Year.
Gold is favored by investors seeking diversification and protection from risk. As the bearish conditions for the precious metal continue to shift to more favorable ones, gold may find support not just based on Fed policy and the value of the U.S. currency.
Ahead of the Christmas holiday weekend, Jim Cramer stated that “there’s a bull market in gold … I feel powerless, just like 2007.” Many investors may feel as though there’s nowhere to hide. That sentiment may be a potential harbinger of things to come.
It’s a crowded market for post-Fed commentary and market predictions for 2019 but without a crystal ball only Santa’s elves know what’s in the making for next year’s proverbial workshop.
Read in browser »
share on Twitter Like James Rickards: Will Gold Pop When The Fed Throws In The Towel? on Facebook

Recent Articles:

The Quest For The Next 100-Bagger
Focus: Whitney George – Berkshire Hathaway Annual Shareholders Meeting
Focus: Mines and Money New York 2018

Sprott U.S. Media, Inc. is a wholly owned subsidiary of Sprott Inc., which is a public company listed on the Toronto Stock Exchange and operates through its wholly-owned direct and indirect subsidiaries: Sprott Asset Management LP, an adviser registered with the Ontario Securities Commission; Sprott Private Wealth LP, an investment dealer and member of the Investment Industry Regulatory Organization of Canada; Sprott Global Resource Investments Ltd., a US full service broker-dealer and member FINRA/SIPC; Sprott Asset Management USA Inc., an SEC Registered Investment Advisor; and Resource Capital Investment Corp., also an SEC Registered Investment Advisor. We refer to the above entities collectively as “Sprott”.
The information contained herein does not constitute an offer or solicitation by anyone in any jurisdiction in which such an offer or solicitation is not authorized or to any person to whom it is unlawful to make such an offer or solicitation.
Forward-Looking Statement
This report contains forward-looking statements which reflect the current expectations of management regarding future growth, results of operations, performance and business prospects and opportunities. Wherever possible, words such as “may”, “would”, “could”, “will”, “anticipate”, “believe”, “plan”, “expect”, “intend”, “estimate”, and similar expressions have been used to identify these forward-looking statements. These statements reflect management’s current beliefs with respect to future events and are based on information currently available to management. Forward-looking statements involve significant known and unknown risks, uncertainties and assumptions. Many factors could cause actual results, performance or achievements to be materially different from any future results, performance or achievements that may be expressed or implied by such forward-looking statements. Should one or more of these risks or uncertainties materialize, or should assumptions underlying the forward-looking statements prove incorrect, actual results, performance or achievements could vary materially from those expressed or implied by the forward-looking statements contained in this document. These factors should be considered carefully and undue reliance should not be placed on these forward-looking statements. Although the forward-looking statements contained in this document are based upon what management currently believes to be reasonable assumptions, there is no assurance that actual results, performance or achievements will be consistent with these forward-looking statements. These forward-looking statements are made as of the date of this presentation and Sprott does not assume any obligation to update or revise.
Views expressed regarding a particular company, security, industry or market sector should not be considered an indication of trading intent of any fund or account managed by Sprott. Any reference to a particular company is for illustrative purposes only and should not to be considered as investment advice or a recommendation to buy or sell nor should it be considered as an indication of how the portfolio of any fund or account managed by Sprott will be invested.
Past performance does not guarantee future results. The views and opinions expressed herein are those of the author’s as of the date of this commentary, and are subject to change without notice. This information is for information purposes only and is not intended to be an offer or solicitation for the sale of any financial product or service or a recommendation or determination by Sprott Global Resource Investments Ltd. that any investment strategy is suitable for a specific investor. Investors should seek financial advice regarding the suitability of any investment strategy based on the objectives of the investor, financial situation, investment horizon, and their particular needs. This information is not intended to provide financial, tax, legal, accounting or other professional advice since such advice always requires consideration of individual circumstances. The products discussed herein are not insured by the FDIC or any other governmental agency, are subject to risks, including a possible loss of the principal amount invested.
Generally, natural resources investments are more volatile on a daily basis and have higher headline risk than other sectors as they tend to be more sensitive to economic data, political and regulatory events as well as underlying commodity prices. Natural resource investments are influenced by the price of underlying commodities like oil, gas, metals, coal, etc.; several of which trade on various exchanges and have price fluctuations based on short-term dynamics partly driven by demand/supply and also by investment flows. Natural resource investments tend to react more sensitively to global events and economic data than other sectors, whether it is a natural disaster like an earthquake, political upheaval in the Middle East or release of employment data in the U.S. Low priced securities can be very risky and may result in the loss of part or all of your investment.  Because of significant volatility,  large dealer spreads and very limited market liquidity, typically you will  not be able to sell a low priced security immediately back to the dealer at the same price it sold the stock to you. In some cases, the stock may fall quickly in value. Investing in foreign markets may entail greater risks than those normally associated with domestic markets, such as political, currency, economic and market risks. You should carefully consider whether trading in low priced and international securities is suitable for you in light of your circumstances and financial resources. Past performance is no guarantee of future returns. Sprott Global, entities that it controls, family, friends, employees, associates, and others may hold positions in the securities it recommends to clients, and may sell the same at any time.
Copyright © 2018 Sprott US Media, All rights reserved.
You are receiving this email because you requested information about the Sprott Group.
Our mailing address is:

Sprott US Media

1910 Palomar Point Way Ste 200

CarlsbadCA 92008-5578