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Fed Rate Hike and The Bullion Market Reaction
With a 0.25 rate hike is the second hike in the last ten years. Gold and silver have been slammed after the hike and the Trump stock market rally resumed. Outside of the US, currencies in developing countries were dropping with rate hike; and since many countries are holding US denominated debt their cost to service it just went higher.
Raising rates typically signify the threat of inflation. So long term, protecting against inflation is one of the first reasons to hold precious metals.
Looking to the outlook for precious metals for 2017 we believe that the Trump rally will falter and the US will be weaker going forward. Irrational exuberance will end and a return to norm will be the outcome. Buyers of Gold and Silver have been patient this long. We cannot predict the price moving forward but higher prices certainly look to be at hand.