Gold investors should not fear interest rate hikes
- Published: Jun 1, 2016, 8 AM
Gold has experienced its longest and strongest bull markets during periods of rising interest rates, says market analyst Mike Fuljenz, president of Universal Coin and Bullion in Beaumont, Texas.
That's why Fuljenz believes gold investors should not fear the likelihood of U.S. interests rate hikes in the near future.
In his latest Metals Market Report, Fuljenz provides the following facts about the last four rate increase cycles, from 1986, 1994, 1999 and 2004:
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??From December 1986, to Sept. 4, 1987, the Federal Reserve raised rates four times, from 5.875 percent to 7.25 percent, while gold rose from an average of $391 in December 1986 to $465 on September 4, 1987.
??From Feb. 4, 1994, to Feb. 1, 1995, the Federal Reserve raised rates six times, from 3.25 percent to 6 percent. Gold was flat throughout that entire year, seldom wavering outside a range of $370 to $390.
??From June 30, 1999, to May 16, 2000, the Federal Reserve raised rates five times, from 4.75 percent to 6.5 percent. During that time, gold rose gradually from $262 to $276.
??From June 30, 2004, to June 29, 2006, the Federal Reserve raised rates 17 times, by 0.25 percent each time, from 1 percent to 5.25 percent. During that time, gold rose from $395 to $613.
Fuljenz also notes the current "torrid" pace at which the U.S. Mint is selling American Eagle gold bullion coins.
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