Stephan Bogner (Rockstone Research) | 25 May 2015 14:44
Janet Yellen Delivers Semi-Annual Testimony To Senate Banking Committee Janet Yellen, Chair of the US Federal Reserve
Boris Gerjovič from Maribor, Slovenia, accomplished a thorough examination of the real impact of interest rates on the price of gold. The results may surprise.
For quite some time, central banks around the globe — first and foremost the Federal Reserve System — are tinkering with the threat of a hike in interest rates, whereas the prompt result is a ‘Damocles Sword’ hovering above the markets, especially gold (higher US interest rates are generally believed to lead to a higher US dollar impacting the price of gold in US dollar negatively). As per “The Sword above the Damocles-Dollar“ (2010):
“The value of the sword is not that it falls, but that it hangs threating to fall… Uneasy rests the head that wears the crown!“
No matter if Janet Yellen doubles US interest rates next month (from 0.25% to 0.5%), a subsequent fall-back may come faster than many would expect. Gradually rising rates would become unbearable in respect to the weighty debt burden. The Great QE Comeback should take place not later than summer of 2016; in order to be in a dazzling position to win the forthcoming presidential elections in favour of the Democrats.
While the broad media is tirelessly trying to explain and persuade the public that an interest rate hike would encompass a prolonged gold price depreciation (likely to be largely priced in already; thus supplying a temporarily suppressed/undervalued price), Boris Gerjovič’s findings indicate quite the contrary:
“The path to the truth was long and in our case paved with unbiased research principles… Our intention is actually to show that there is no reason to believe that as a consequence of an interest rates hike there will be a decreasing trend in the gold price. In contrary, the price of gold could even rise and many people could be surprised by this increase.“
(Boris Gerjovič in “The Truth About The Impact Of Interest Rates On The Price Of Gold”)