Direxion Daily Gold Miners Bull 2X (NUGT)

[profitusmaximus]

Article is almost exactly one year old, but still relevant given next week's FOMC meeting:

"When the Fed raises its key interest rate, bonds and dividend-paying stocks typically pay higher rates as well. Because gold doesn’t pay income, higher rates increase the “opportunity cost” of owning gold. Conventional wisdom says that higher rates are bad for gold.

But the data shows that conventional wisdom is wrong…

In July, HSBC’s Global Research team published research showing that the price of gold has increased after the last four Fed rate hikes.

History shows that gold prices also fall leading into a rate hike and generally rise, though sometimes with a lag, after the first rate hike… Investors are apt to unload gold in anticipation of tightening monetary policies. This negative pressure is sustained until the Fed announces a rate hike, which then eases the negative sentiment towards the yellow-metal. This explains the subsequent rallies in gold that occurred shortly after the Fed announced the first rate hike in the last four tightening cycles.

The chart below shows gold going up after the Fed started raising rates in 2004.

(My edit: couldn't get chart to copy over....you can find it here):

https://www.caseyresearch.com/articles/heres-what-happens-to-gold-when-interest-rates-go-up

NUGT