Financial Benchmarks Display Bullish Trend
Following the recent session of the Federal Open Market Committee (FOMC), the Federal Reserve announced that it will keep interest rates unchanged. This decision was met with positive reactions from the market, which had expected rate reductions in 2024. The influence of Fed Chair Jerome Powell's dovish stance further contributed to the optimistic sentiment. As a result, U.S. stocks, the crypto economy, and precious metals like gold and silver experienced significant gains.
Positive Market Response to the Fed's Decision
Major U.S. stock indices saw substantial growth after the FOMC's announcement, reflecting the market's upbeat mood. The crypto sector also rallied, with a significant 3.66% increase, and bitcoin (BTC) rose by 4%. Additionally, traditional safe-haven assets like gold and silver recorded gains of 2.41% and 4.48%, respectively. These positive market movements demonstrated the widespread optimism surrounding the Fed's decision.
Powell's Comments on the Economic Situation
In his comments following the FOMC meeting, Powell discussed the current economic situation. He emphasized that the economy is not currently in a recession but acknowledged the possibility of one in the future. Powell highlighted the importance of careful monetary policy, stating, "We are very focused on not making the mistake of keeping rates too high too long." He also noted the progress on core inflation and non-housing services inflation, indicating a cautious yet adaptive approach to future monetary policy adjustments.
A Shift in the Central Bank's Policy
Contrary to some market speculations, Powell hinted at a shift in the central bank's policy. He suggested that the current policy rate is likely at or near its peak for this tightening cycle, signaling that further rate hikes are unlikely. This aligns with the belief among speculators that the Fed may be finished with rate hikes and that rate cuts could be on the horizon in 2024. The Fed's commitment to returning inflation to its 2% target remains, but the methods to achieve this goal are evolving.
Insights from Market Experts
Economist Peter Schiff expressed his views on social media, stating that Powell's claim of winning the inflation war without causing harm to the economy or employment is due to the fact that he actually surrendered. Schiff added, "The only reason the phony economy and bull market are still alive is that inflation is not dead."
Sven Henrich of Northman Trader offered his insights, suggesting that Powell's actions have undermined his credibility. Henrich stated that Powell's claims of the Fed being at a restrictive policy level are contradicted by the eased financial conditions, which are now at the same loose levels as when the rate hikes began.
Market Expectations and Predictions
While Powell's address signaled that rate hikes are nearing their limit and reductions may occur in 2024, the CME Fedwatch tool predicts a rate increase at the next FOMC meeting in January. The market anticipates a hike with a probability of 89.7%, while 10.3% do not foresee any change.
In conclusion, the Federal Reserve's decision to maintain interest rates and its indication of potential reductions in 2024 have generated a positive market response. However, there are differing opinions on the Fed's stance, with some experts raising concerns about credibility and inflation. Market expectations and predictions also vary. What do you think about the Fed's current stance? Do you expect more rate hikes or rate cuts in the future? Share your thoughts and opinions in the comments section below.
Frequently Asked Questions
What Is a Precious Metal IRA?
A precious metal IRA allows you to diversify your retirement savings into gold, silver, platinum, palladium, rhodium, iridium, osmium, and other rare metals. These are called “precious” metals because they're very hard to find and very valuable. These metals are great investments and can help protect your financial future from economic instability and inflation.
Bullion is often used for precious metals. Bullion refers simply to the physical metal.
You can buy bullion through various channels, including online retailers, large coin dealers, and some grocery stores.
You can invest directly in bullion with a precious metal IRA instead of buying shares of stock. This ensures that you will receive dividends each and every year.
Precious Metal IRAs don’t require paperwork nor have annual fees. Instead, you pay only a small percentage tax on your gains. You can also access your funds whenever it suits you.
Who has the gold in a IRA gold?
The IRS considers anyone who owns gold to be “a form money” and therefore subject to taxation.
This tax-free status is only available to those who have owned at least $10,000 of gold and have kept it for at minimum five years.
The purchase of gold can protect you from inflation and price volatility. But it's not smart to hold it if your only intention is to use it.
You will need to declare the value of gold if you intend on selling it one day. This could impact how capital gains taxes you owe for cash investments.
It is a good idea to consult an accountant or financial planner to learn more about your options.
Can I hold a gold ETF in a Roth IRA?
While a 401k may not offer this option for you, it is worth considering other options, such an Individual Retirement Plan (IRA).
A traditional IRA allows for contributions from both employer and employee. Another option is to invest in publicly traded corporations with an Employee Stockownership Plan (ESOP).
An ESOP is a tax-saving tool because employees have a share of company stock as well as the profits that the business generates. The money invested in ESOPs is taxed at a lower rate that if it were owned directly by an employee.
A Individual Retirement Annuity is also possible. An IRA allows for you to make regular income payments during your life. Contributions made to IRAs are not taxable.
Statistics
- Indeed, several financial advisers interviewed for this article suggest you invest 5 to 15 percent of your portfolio in gold, just in case. (aarp.org)
- Contribution limits$6,000 (49 and under) $7,000 (50 and up)$6,000 (49 and under) $7,000 (50 and up)$58,000 or 25% of your annual compensation (whichever is smaller) (lendedu.com)
- Gold is considered a collectible, and profits from a sale are taxed at a maximum rate of 28 percent. (aarp.org)
- You can only purchase gold bars at least 99.5% purity. (forbes.com)
- Instead, the economy improved, stocks rebounded, and gold plunged, losing 28 percent of its value in 2013. (aarp.org)
External Links
bbb.org
cftc.gov
law.cornell.edu
- 7 U.S. Code SS 7 – Designation of boards of trade as contract markets
- 26 U.S. Code SS 408 – Individual retirement funds
finance.yahoo.com
How To
Three Ways to Invest In Gold For Retirement
It's crucial to understand where gold fits in your retirement strategy. You can invest in gold through your 401(k), if you have one at work. You might also be interested to invest in gold outside the workplace. You could, for example, open a custodial bank account at Fidelity Investments if your IRA (Individual Retirement Account) is open. You might also consider purchasing precious metals directly from a trusted dealer if they are not already yours.
These are the rules for gold investing:
- Buy Gold with Your Cash – Don't use credit cards or borrow money to fund your investments. Instead, deposit cash into your accounts. This will protect your against inflation and increase your purchasing power.
- Own Physical Gold Coins – You should buy physical gold coins rather than just owning a paper certificate. The reason is that it's much easier to sell physical gold coins than certificates. You don't have to store physical gold coins.
- Diversify your Portfolio. This is how you spread your wealth. You can invest in different assets. This can reduce market volatility and help you be more flexible.
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By: Jamie Redman
Title: The Federal Reserve Maintains Interest Rates, Eyes Potential Reductions in 2024
Sourced From: news.bitcoin.com/powells-fed-policy-criticized-experts-claim-phony-economy-and-credibility-destruction-post-rate-decision/
Published Date: Thu, 14 Dec 2023 06:30:56 +0000
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