Wall Street Silver: Fed Risking Market Collapse With Rate Hikes

So far this cycle, the Federal Reserve has hiked interest rates to just 0.75 percent. That’s a far cry compared to prior rate hike cycles. Yet the market has had a strong reaction to those hikes.

One reason may be that coming off of zero percent is hard. With a rising cost to borrow money, stocks are likely to drop as corporations scale back spending plans. And rising interest rates are bad for bond prices.

While credit markets have taken this move in stride, any potential shutdown of that market could lead to the Fed rapidly reversing course.

And there’s a view that a slowing economy will likely force the Fed to stop hiking interest rates. That would be well before they finish with the rate hikes they’ve sold to the market in the past few months.

In short, there’s an expectation that interest rates won’t rise for much longer—but it will take some more market chaos for that to happen.

That could be a boon for precious metals, as they’ve held up strongly in the past few months. While other asset classes have pulled back in the past few months, gold and silver have held up relatively well.

There’s even an argument to be made that this asset class is forming a new base price around today’s levels, which could lead to a surge higher in the future.

To listen to the full analysis on the Wall Street Silver podcast, listen here.