caseyresearch.com / Justin Spittler / June 16, 2016
Gold just set its most important high in two years.
This morning, the price of gold topped $1,300 for the first time since August 2014. Gold is now riding a six-day winning streak, and is just a few percentage points from setting a new two-year high.
If you’ve been reading the Dispatch, you know gold stormed out of the gate this year. It jumped 16% during the first three months of the year, its best quarter in three decades.
Then, gold cooled off. It went nearly two months without setting a new high.
We told you it was healthy for gold to take a “breather” after such a hot start to the year. But we also said it would likely head higher soon. We encouraged readers to use the break in the action as a buying opportunity.
Last Tuesday, gold started rallying again. It’s up 22% on the year.
• The Federal Reserve gave gold a big push yesterday…
Yesterday, the Fed said it will keep its key interest rate at 0.38%…well below its historic average of 5.0%.
The Fed slashed rates in 2008 to encourage borrowing and spending. It’s kept them near zero for eight years in an effort to “stimulate” the economy.
It hasn’t worked. The U.S. economy is growing at its slowest pace since World War II. And America’s real median household income is about $2,500 lower than it was in 2007.
The Fed effectively makes money “cheap” when it keeps rates low. That’s bad for the U.S. dollar, which is a paper currency. Yesterday, the U.S. Dollar Index, which tracks the dollar’s performance vs. major currencies like the euro and Japanese yen, fell 0.4%. It’s now down 4.2% on the year.
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