This past Wednesday, June 19th, 2019, the US central bank Federal Reserve and it's Open Market Committee decided to leave interest rates unchanged, yet they also hinted at standing ready to cut interest rates in the months to come to potentially accommodate financial markets as a possible recession draws near.
Last week our guest David Jensen pointed out that the previous 2 Federal Fund Rate cut cycles were closely intertwined and followed by financial market recessions. So the ongoing meme that somehow if the Fed cuts rates it will be good for financial markets, in the long run, remains dubious based on past cycles.
What you are looking at right now is a Bloomberg chart tweeted on Wednesday by Real Vision’s Raoul Pal, and it shows the full fiat currency era in terms of Fed Funds Rate cut cycles versus recessionary timeframes .
The correlation is not perfect, but about 75% of the time the Fed’s cutting of interest rates was closely followed by financial market valuation losses for the mass of US stock shareholders. Turning to the gold and silver markets on the day of this recording 7:45 PM Eastern on Wednesday, June 19th, 2019.
The silver spot price reacted positively to the news that the Federal Reserve is likely to go full dovish with accommodative policies. We are closing the day with the silver spot price around $15.20 per troy ounce in full fiat US dollars.
As for the gold price, similar story with a day closing $1,365 per ounce fiat Federal Reserve not price. Remains to be seen if gold can find enough strength to plow through this long-running $1,400 oz resistance level any time soon, or will it merely be a little later for gold to resume its long-awaited upswing in price.
The gold-silver ratio has fallen below the near 30-year high mark of 90, closing the day’s trading at 89.5 ounces of silver to afford one mere troy ounce of gold. If we do end up seeing Federal Fund Rates cut and the US dollar somehow strengthens into the end of summer, do not be surprised to see this ratio climb a bit higher and possibly threaten the 1930 Great Depression-esque 100 level.
- Source, Silver Doctors
