Why You Should Ignore Federal Reserve Policy Statements in Your Wealth Preservation Strategy

smartknowledgeu's picture

Later today, at 2PM New York time, US Federal Reserve bankers will release minutes from their last meeting and traders may move some markets sharply in a knee-jerk reaction to what is contained in these minutes, but don’t let any irrational responses to Federal Reserve bankers steer your focus away from reality. I’ve been discussing the absurdity of planning an investment and wealth preservation strategy around Federal Reserve banker policy statements for a long time now. Just check out my entry here from nearly a year ago, in which I discussed how Federal Reserve bankers absurdly rehashed the same statement for six straight years without ever stating anything new, and then in 2015, started placing interest rate hikes on the table again, but again, absurdly have since issued identical statements with slightly different language that virtually state nothing. Just visit their website and pull any of the archived statements from the past two years and you will encounter, in every statement, language that discusses "possible" interest rate hikes if sufficient progress has been demonstrated in the US economy towards their realized and expected objectives of “full employment and 2% inflation”.

 

If the Fed Reserve bankers really desired (1) fundamental growth in the economy, (2) sustainable stock market growth instead of artificial bubbles comprised of grossly distorted stock prices, (3) inflation that was really 2% or lower, and (4) anything close to full employment (none of which exist by the way), they would have voluntarily dissolved themselves in 1913 and let free markets set interest rates instead of artificially manipulating interest rates for Machiavellian purposes ever since. In fact, I also posted commentary a year ago about how one can insulate oneself against falling victim to the lies of Central Bankers in their production of absurd “official” inflation and unemployment rates. In any event, in the absence of the liberating dissolution of Central Banks worldwide and allowing free market interest rates to exist, if Fed Reserve bankers were sincere about any of their proclaimed objectives of low inflation, full employment, sustainable economic growth, etc., they would have needed to start raising interest rates many moons ago. But they haven’t.

 

In terms of silver and gold assets, we were consistent last year in stating that prices would continue to fall all year after a January spike to $1,308 an ounce gold and $18.50 an ounce silver, and because of our year-long negative outlook on gold and silver in 2015, we entered and quickly exited after short runs higher, and we were still able to return a positive, healthy 31.6% yield on our junior gold and silver mining stocks in our Platinum portfolio despite huge losses in the HUI gold bugs index of more than 50% from January 2015 to January 2016. In fact, you can follow this link to see how I warned back then, after the January gold and silver spike in 2015, that "even though gold [was] above $1211 an ounce now and silver ha[d] risen 1.96%...don't get too excited, because Western bankers [were] waiting nearby to hammer gold back below $1,200 again later [that] month."  However, unlike last year, I have been likewise consistent in our belief that this year would produce a year-long rising gold and silver price trend, and instead of selling all gold and silver price spikes, as I advocated in 2015, I believe that all dips in PM asset prices should be bought this year, even those dips that may be created by absurd Central Banker policy statements.

 

For example, this past June, I explicitly stated that “much higher gold and silver prices [were] still ahead” and immediately after I wrote that article, in less than two weeks, gold surged 8.4% and and silver rocketed higher by 23.5%. Since then, both PMs have been consolidating in price, but whereas it was my belief in 2015 that all price spikes in gold and silver stocks should be sold, it is my belief that in 2016, all dips in gold and silver stocks should be bought. In fact, I reiterated this belief in this 26 July article I released after gold had fallen $67 an ounce in and silver had fallen $1.87 an ounce that month, by stating that the fall in gold and silver prices back then would “prove to be just a temporary lull in a strong continuing uptrend” that started at the end of last year, and discussed, how gold and silver stocks were still in a state of undervaluation last month. (In fact, you may visit that link to see that 18 of the stocks in our Platinum portfolio have surged by 100% to 400%+ by mid-year this year and also that we were able to duplicate similar returns in our Platinum junior mining stock portfolio in 2010. Despite this, we still feel that the largest gains in this asset class are ahead of us, after maintaining a negative outlook on the same asset class for all of 2015.)

 

In conclusion, even if the Federal Reserve bankers raise interest rates again at some point in the future, as the title of my article states, we have traveled well beyond the point of no return for a long time now regarding interest rate policy solutions, and any knee-jerk reactions of immediate falling gold and silver prices in response to more hollow “hawkish” Federal Reserve minutes or even too-little, too-late, actual small interest-rate increases should be completely disregarded, with all eyes kept firmly on the big picture of the inevitable continuing fiat currency purchasing power destruction. No matter if Central Bankers raise interest rates or not in the future, they have firmly set the course for further and inevitable fiat currency purchasing power destruction, and this should be the unwavering focus of one's wealth preservation strategy.

 

 

About SmartKnowledgeU: To learn when to buy the dips that develop during this continuing gold and silver price uptrend for all gold and silver assets, including gold and silver stocks, consider our Crisis Investment Opportunities newsletter and our Platinum Membership. Special 24-hour flash sale, today only. Visit smartknowledgeu.com for more details about discount Coupon Codes, valid today only, on our annual retail Crisis Investment Opportunities Membership, Limited Edition Platinum Membership, and full Platinum Membership.

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RaceToTheBottom's picture

Jawboning, it is what economics has become.