Traders had priced in four interest rate hikes for next year. The Federal Reserve says three. This resulted in the US dollar falling and gold and silver getting a boost. All is not over. The European central bank and the Bank of England meetings can affect the markets. America’s growth outlook for 2018 has been raised. If the ECB and BOE also raise their growth forecast for next year, then the US dollar could see another sell off and gold and silver could get back some of the lost investor confidence.
The lower base for US nonfarm payrolls for next year is 140,000. The US economy needs to continuously add 140,000 NFP every month to ensure the case for an interest rate hike every quarter. Next year there is a competition between the USA, the UK and the Eurozone on growth versus interest rate. The Eurozone has imported migrants from Africa and Asia for higher growth. Migrants will ensure that Eurozone growth beats American and UK. Eurozone member nations are distributing free money to the migrants just to support their ‘too big too fail’ corporations. This is a very disturbing practice and a self-destructive practice. Gold and other non US dollar alternates will zoom.
Everyone says bitcoin and other crypto currencies are not backed by anything. I ask everyone was the US dollar backed by anything when it started after the First World War. The US dollar is just backed by a heavily indebted nation currently. Nations are supporting the US dollar as they have invested heavily in US bond markets. If the USA sinks a lot of nations will become bankrupt. There will be mass unrest globally. With bitcoin and other crypto currencies, it is just a starting point to replace the US dollar and other paper currencies. Over a period of time as central banks start supporting it, bitcoin and crypto currencies will be backed by nation’s physical assets.
This post was published at GoldSeek on 14 December 2017.