Fed Does Nothing: Gold and Bitcoin to Benefit?

[OROBTC]

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Our pals at the Federal Reserve did nothing (ie, did not raise interest rates from the close to zero where we are now).  Their infamous "dot plots" (member predictions of rates for the next couple of years) show their expectations of rates for a long time.  Low!

One would think this will benefit gold (approx. $1335 now) and Bitcoin ($600).

Any guesses?

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[Zentuple]

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Our pals at the Federal Reserve did nothing (ie, did not raise interest rates from the close to zero where we are now).  Their infamous "dot plots" (member predictions of rates for the next couple of years) show their expectations of rates for a long time.  Low!

One would think this will benefit gold (approx. $1335 now) and Bitcoin ($600).

Any guesses?

I guess screwing over the middle class and creating free money is too cushy to end now..

[Powerbunny]

Or maybe the world is on the brink of another financial collapse and any change of interest rates back to previous levels would end up exacerbating the situation further.

[HabBear]

...

Our pals at the Federal Reserve did nothing (ie, did not raise interest rates from the close to zero where we are now).  Their infamous "dot plots" (member predictions of rates for the next couple of years) show their expectations of rates for a long time.  Low!

One would think this will benefit gold (approx. $1335 now) and Bitcoin ($600).

Any guesses?

I guess screwing over the middle class and creating free money is too cushy to end now..

Low rates don't screw over the middle class, kid. Low rates make it easier for the middle class to buy a home, carry that credit card debt, buy a car, take out a student loan. Don't be so foolish!

To the OP, I don't think the low rates will help gold or bitcoin much (but bitcoin more than gold). The people that will "flock" to bitcoin specifically due to low interest rates is really low, it's only the people that are purely looking for a growth appreciation investment opportunity. And simply put, interest rates don't factor in to the decision to choose a growth appreciation investment. It's not like bitcoin offers an interest rate. So the risk profiles are different.

Low rates motivate people to take out loans (which spurs economic activity and more spending), spend money, or invest in the stock market. All three of those things spur the economy. That's why the Fed is keeping things the way they are, they don't want to stifle economic activity.

[The_Dark_Knight]

...

Our pals at the Federal Reserve did nothing (ie, did not raise interest rates from the close to zero where we are now).  Their infamous "dot plots" (member predictions of rates for the next couple of years) show their expectations of rates for a long time.  Low!

One would think this will benefit gold (approx. $1335 now) and Bitcoin ($600).

Any guesses?

I guess screwing over the middle class and creating free money is too cushy to end now..

Low rates don't screw over the middle class, kid. Low rates make it easier for the middle class to buy a home, carry that credit card debt, buy a car, take out a student loan. Don't be so foolish!

To the OP, I don't think the low rates will help gold or bitcoin much (but bitcoin more than gold). The people that will "flock" to bitcoin specifically due to low interest rates is really low, it's only the people that are purely looking for a growth appreciation investment opportunity. And simply put, interest rates don't factor in to the decision to choose a growth appreciation investment. It's not like bitcoin offers an interest rate. So the risk profiles are different.

Low rates motivate people to take out loans (which spurs economic activity and more spending), spend money, or invest in the stock market. All three of those things spur the economy. That's why the Fed is keeping things the way they are, they don't want to stifle economic activity.

But governments, the private sector and the public are up to the eyeballs in debt, while raising the rates will have a negative impact, I don’t think keeping the rates as they are does that much, it just keeps the ship afloat for a little bit longer.

[HabBear]

...

Our pals at the Federal Reserve did nothing (ie, did not raise interest rates from the close to zero where we are now).  Their infamous "dot plots" (member predictions of rates for the next couple of years) show their expectations of rates for a long time.  Low!

One would think this will benefit gold (approx. $1335 now) and Bitcoin ($600).

Any guesses?

I guess screwing over the middle class and creating free money is too cushy to end now..

Low rates don't screw over the middle class, kid. Low rates make it easier for the middle class to buy a home, carry that credit card debt, buy a car, take out a student loan. Don't be so foolish!

To the OP, I don't think the low rates will help gold or bitcoin much (but bitcoin more than gold). The people that will "flock" to bitcoin specifically due to low interest rates is really low, it's only the people that are purely looking for a growth appreciation investment opportunity. And simply put, interest rates don't factor in to the decision to choose a growth appreciation investment. It's not like bitcoin offers an interest rate. So the risk profiles are different.

Low rates motivate people to take out loans (which spurs economic activity and more spending), spend money, or invest in the stock market. All three of those things spur the economy. That's why the Fed is keeping things the way they are, they don't want to stifle economic activity.

But governments, the private sector and the public are up to the eyeballs in debt, while raising the rates will have a negative impact, I don’t think keeping the rates as they are does that much, it just keeps the ship afloat for a little bit longer.

Haha, so it's the Fed's fault that people don't have any self control to keep their spending and lending habits within their means of income? Come on, man! Do you want the Fed to tell everyone what they should and shouldn't buy?

Your rebuttal here is ridiculous. Want to try again? I'll stay online for a bit.

[digital_sucrose]

...

Our pals at the Federal Reserve did nothing (ie, did not raise interest rates from the close to zero where we are now).  Their infamous "dot plots" (member predictions of rates for the next couple of years) show their expectations of rates for a long time.  Low!

One would think this will benefit gold (approx. $1335 now) and Bitcoin ($600).

Any guesses?

I guess screwing over the middle class and creating free money is too cushy to end now..

Low rates don't screw over the middle class, kid. Low rates make it easier for the middle class to buy a home, carry that credit card debt, buy a car, take out a student loan. Don't be so foolish!

To the OP, I don't think the low rates will help gold or bitcoin much (but bitcoin more than gold). The people that will "flock" to bitcoin specifically due to low interest rates is really low, it's only the people that are purely looking for a growth appreciation investment opportunity. And simply put, interest rates don't factor in to the decision to choose a growth appreciation investment. It's not like bitcoin offers an interest rate. So the risk profiles are different.

Low rates motivate people to take out loans (which spurs economic activity and more spending), spend money, or invest in the stock market. All three of those things spur the economy. That's why the Fed is keeping things the way they are, they don't want to stifle economic activity.

As long as the general public will pay back those loans. We don't want another Junk Bond scenario which took place less than a decade ago. People are stupid though so who knows...

[HabBear]

As long as the general public will pay back those loans. We don't want another Junk Bond scenario which took place less than a decade ago. People are stupid though so who knows...

Junk bond scenario? I think you're confusing terms.

Are you referring to the mortgage crisis or the credit crisis? Consumers are drastically misinformed on financial management, it's an epidemic. It needs to be corrected at the grade school level and in homes. Parents need to teach their kids about responsible use of money and credit.

Those credit crises did involve buyer/consumer lack of education and lack of responsibility. However the trigger that put those poor buying decisions at risk was a corrupt mortgage and investment banking market. There's no evidence that the Fed is involved in some corruption related to keeping rates low...there's literally nothing they could gain from it!

[The Sceptical Chymist]

Or maybe the world is on the brink of another financial collapse and any change of interest rates back to previous levels would end up exacerbating the situation further.

This, but I'd say we're in for a hell of a stock market run, but bank stocks are going to get killed.  Not sure about gold or bitcoin.  If Armageddon hits, yeah gold will be more valuable.   Bitcoin I'm not sure about.

[JITENDERPAR3]

...

Our pals at the Federal Reserve did nothing (ie, did not raise interest rates from the close to zero where we are now).  Their infamous "dot plots" (member predictions of rates for the next couple of years) show their expectations of rates for a long time.  Low!

One would think this will benefit gold (approx. $1335 now) and Bitcoin ($600).

Any guesses?

no , gold can't give that much profit than bitcoin because with gold there is no sharp rise and fall of price but in bitcoin sharply goes down and sharply goes up . so there is more amd more chance in bitvoin to get profit than in static gold .

[HabBear]

This, but I'd say we're in for a hell of a stock market run, but bank stocks are going to get killed.  Not sure about gold or bitcoin.  If Armageddon hits, yeah gold will be more valuable.   Bitcoin I'm not sure about.

Sorry bud, if armageddon its our access to electricity is going to be sparse...and therefore so will access to the blockchain (which obviously makes Bitcoin spendable). If people can't transact bitcoin, the price is likely to drop significantly.

Another element to this questions (for Bitcoin at least) is how the market's treatment of bitcoin as currency vs. store of value shifts. If people keep demand high but don't want to use it as a currency the price will steadily increase. That's part of what we should be shooting for.

[STT]

...

Our pals at the Federal Reserve did nothing (ie, did not raise interest rates from the close to zero where we are now).  Their infamous "dot plots" (member predictions of rates for the next couple of years) show their expectations of rates for a long time.  Low!

One would think this will benefit gold (approx. $1335 now) and Bitcoin ($600).

Any guesses?

I guess screwing over the middle class and creating free money is too cushy to end now..

Low rates don't screw over the middle class, kid. Low rates make it easier for the middle class to buy a home, carry that credit card debt, buy a car, take out a student loan. Don't be so foolish!

To the OP, I don't think the low rates will help gold or bitcoin much (but bitcoin more than gold). The people that will "flock" to bitcoin specifically due to low interest rates is really low, it's only the people that are purely looking for a growth appreciation investment opportunity. And simply put, interest rates don't factor in to the decision to choose a growth appreciation investment. It's not like bitcoin offers an interest rate. So the risk profiles are different.

Low rates motivate people to take out loans (which spurs economic activity and more spending), spend money, or invest in the stock market. All three of those things spur the economy. That's why the Fed is keeping things the way they are, they don't want to stifle economic activity.

But governments, the private sector and the public are up to the eyeballs in debt, while raising the rates will have a negative impact, I don’t think keeping the rates as they are does that much, it just keeps the ship afloat for a little bit longer.

Haha, so it's the Fed's fault that people don't have any self control to keep their spending and lending habits within their means of income? Come on, man! Do you want the Fed to tell everyone what they should and shouldn't buy?

The problem here is the premise of this thread is incorrect to begin with.    The FED has done nothing, no this is not the current situation, this month or decade.  They run constant interference on every dollar transaction.   We believe in certain things because they have always been that way for the duration of our lifetimes, it becomes invisible and a default state but it has not always been the case that a central bank dictates a fixed and artificial interest rate.     The natural point for rates in the USA is not 0.5% as it is currently set,  headline inflation and effective interest rates are more market based but to say the FED has done nothing would be ignoring ongoing QE programs.

Not only has previous QE not been reversed but the FED is still actively buying into new US treasury debt in order to ensure no unwinding of previous leverage occurs.  Of course this is needed or pressure would accumulate due to the continual deficit spending by central government, none of this resembles a natural state of balance or that the FED has done nothing.    Even those who believe the FED should be closed and brought to an end for its failures know they cannot just have the FED do nothing or the dollar ceases to exist.  Its nonense to insist they do nothing when they are struggling to do everything and one day even that will not be enough, the difference will be obvious at that point

https://mises.org/library/central-banks-dont-dictate-interest-rates

[qiwoman2]

I would invest in both bitcoin and gold as part of your savings portfolio as having all your investments and savings in fiat, especially in U.S dollars, is no longer what I would deem viable and safe, especially if you are trying to save long term and for your pensions. Fiat values are dwindling over time so you are going into negative.

[wikenpp]

I would invest in both bitcoin and gold as part of your savings portfolio as having all your investments and savings in fiat, especially in U.S dollars, is no longer what I would deem viable and safe, especially if you are trying to save long term and for your pensions. Fiat values are dwindling over time so you are going into negative.

I am not sure what it is the FED could do, since bitcoin regulation is made in congress. The FED controls the interest rate and with the US economy growing they did not see any reason to make a change. Which was expected by brokers and investors.  I don't believe btw that interest rates have a big influence on the bitcoin price btw.

[Shiroslullaby]

I don't believe btw that interest rates have a big influence on the bitcoin price btw.

What do you think are the biggest influences?
Is it all just supply/ demand? Are whales influencing the price to make themselves some quick profit?
Always interested to hear peoples thoughts on what actually influences price and where they think the price is going.

[The Sceptical Chymist]

This, but I'd say we're in for a hell of a stock market run, but bank stocks are going to get killed.  Not sure about gold or bitcoin.  If Armageddon hits, yeah gold will be more valuable.   Bitcoin I'm not sure about.

Sorry bud, if armageddon its our access to electricity is going to be sparse...and therefore so will access to the blockchain (which obviously makes Bitcoin spendable). If people can't transact bitcoin, the price is likely to drop significantly.

Another element to this questions (for Bitcoin at least) is how the market's treatment of bitcoin as currency vs. store of value shifts. If people keep demand high but don't want to use it as a currency the price will steadily increase. That's part of what we should be shooting for.

Well, I meant financial armageddon.  Like if the USD collapses, and other currencies.  Sure, if electricity goes bye-bye then bitcoin is also bye-bye.  Gold and other metals and other surviving currencies become king.

[Doamader]

Well its impossible to energy and internet going down now, if that happen people will start a war, and believe me the population will be just some thousands against the milions we do have now. Makes no sense even think about a world without energy, back to the past, no way. Sure gold and others metals would be the coin for transactions once again, but people would kill to get it instead exchange. Bitcoin halving is something the currencies cant do or make, double their value after some period, 2020 we will see bitcoin maybe at 1000 dollars and with support.

[STT]

Bitcoin halving relates to inflation, other currencies constantly increase their monetary base.   They can easily do something similar but in many cases the government in unable to stop new money supply and still pay their bills.  US treasury is one example

I don't believe btw that interest rates have a big influence on the bitcoin price btw.

What do you think are the biggest influences?
Is it all just supply/ demand? Are whales influencing the price to make themselves some quick profit?
Always interested to hear peoples thoughts on what actually influences price and where they think the price is going.

Interest rates are a very large factor in supply and demand for a currency.   When silver went from $10 to $50 an ounce in a short period of time it preceded the highest dollar rates ever seen, this was needed to restore confidence.   If any attempt were made to do this now, the US government would default on its debt like Russia in 1998.   Such a large fall from good standing would be revolutionary

Determined to wring inflation out of the economy, Federal Reserve chairman Paul Volcker slowed the rate of growth of the money supply and raised interest rates. The federal funds rate, which was about 11% in 1979, rose to 20% by June 1981.

How does all this relate to Bitcoin ?  massively, the exchange rate alone even with flat value would vary considerably and likely we would also experience a large influx of capital flow.  Bitcoin would be more widely used for reliable commerce in global transactions along with many different competing currencies including gold and silver as mentioned above

[MingLee]

...

Our pals at the Federal Reserve did nothing (ie, did not raise interest rates from the close to zero where we are now).  Their infamous "dot plots" (member predictions of rates for the next couple of years) show their expectations of rates for a long time.  Low!

One would think this will benefit gold (approx. $1335 now) and Bitcoin ($600).

Any guesses?

Eh, maybe, but I wouldn't get excited. We might see a bit of increased volatility but speaking from what I see right now there hasn't been anything done, even with the news coming out from the fed.

I'd expect things to have to go wrong economically before we will see any large movement on the surface of the market.

[OROBTC]

...

So far, with almost one week on (and one debate done), neither gold nor BTC have moved much at all.  Indeed, this will all take time to see how prices of these two assets shake-out.

The Fed will for sure influence gold and BTC.  How much is difficult for me to say, that is why I asked for your opinions.

And who becomes our next president as well.

[yayayo]

I don't think that the Fed's activity/inactivity regarding interest rates will have an immediate impact on Bitcoin prices - at least not a significant one. Although (sadly...) their number seems to be increasing, Bitcoin is still not populated by the same type of wallstreet speculator type investors as the stock markets. It is not as widely known as gold and consequently only relatively few people will have it on their mind as a potential hedge against the Fed's policy or - which seems to be more important for short term effects - expect that others will use it as such kind of hedge.

Of course in the long term the Fed policy will have an impact on Bitcoin adoption. The key factor are not interest rates, but quantitative easing. By expanding the monetary base, the Fed will generate significant inflationary effects which will destroy trust in the fiat trash currency and stimulate the search for alternatives. When capital controls are enacted in addition, Bitcoin might even become more attractive than precious metals, because it can be moved around worldwide and can't be easily confiscated.

ya.ya.yo!