I’m at the Rule Symposium on Natural Resource Investing in Florida this week…
I’m delivering a keynote address on the causes behind global volatility and how investors can navigate this turbulence.
But yesterday afternoon, the Federal Reserve raised interest rates by another 0.75%. This latest hike – its fourth this year – brings the total interest rate increase to 2.25%… with more to come.
So I shot a short video to quickly update you on what that means for the economy and your money…
I also share with you the key insights I gleaned from listening to and speaking with the top minds in the mining, commodity, and economic analysis space gathered at the event here in Florida.
It’s all in the short video below. It’s just under four minutes long.
Just click on the image below to watch it.
And as always, I’ve also included a transcript underneath.
I hope you enjoy my video update from Florida.
Let me know what you think at [email protected].
Happy investing, and I’ll be in touch again soon.
Regards,
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Nomi Prins
Editor, Inside Wall Street with Nomi Prins
TRANSCRIPT
Hi, Nomi here. I’m coming to you from the Boca Raton Resort in Florida, where I was honored to be a keynote speaker and join panel discussions at the Rule Symposium on Natural Resource Investing.
This annual event is hosted by world-renowned natural resource investor, and my friend, Rick Rule. I was just talking to him about it, and he thinks it’s been a fantastic day so far.
Rick gathered the top minds in the mining, commodity, and economic analysis space here to discuss industry trends. And also, what’s ahead for the natural resource space. But more on that in a moment.
First, I want to give you the inside scoop on what I presented here in South Florida. And also, something I left out that I wanted to tell you.
Where Interest Rate Hike Will Be Felt Most
I addressed the causes and the conditions behind global volatility in the markets and how investors can navigate this turbulence.
But also, that there’s a transitional element to it that’s exciting. What I told them is something I’ve already shared with you.
Certain elements of economic distress, like war and supply chain disruptions, are obviously impacting the markets. But the Fed remains the largest driver of uncertainty.
So, by understanding the distortions caused by irresponsible central bank policies, you can avoid getting caught up in all of this noise and all of this near-term choppiness.
And you can remain positioned in sectors and companies that will benefit from The Great Distortion going forward.
Yes, the Fed’s rate hikes, including yesterday’s hike of another 75 basis points (0.75%), do risk pushing the economy to the brink of recession.
By unleashing aggressive rate hikes this late in the game – because the Fed was behind on inflation – the Fed’s attempting to rope in inflation.
But what I revealed at the conference is that tightening so quickly actually hurts low-wage workers the most. And workers, in general.
Unemployment will rise. And Main Street is going to feel – and is feeling – that squeeze.
Plus, the Fed can’t control food, fuel, or rent prices, anyway.
The Fed’s Political Games
But here’s what I want you to know…
This squeeze on wages and on parts of the real economy is going to put the Fed under political crosshairs.
And history shows us that in a midterm election year, the Fed will come under more scrutiny.
Things can change really quickly in the DC Beltway. Under Paul Volcker in the 1980s, the Fed triggered a deep recession in order to lower inflation. And that action was met with a lot of public outcry.
Leaders in Washington and within the Fed know this history.
That’s why there’s every reason to believe they’re going to work to avert it. We’re going to see some language changing, as we already did yesterday, in what the Fed says.
The Outlook for Metals
So, that gets me back to the Rule Symposium…
While I was here, I got to hear from investors and leaders of all stripes, Primavera investors, natural resource purists, gold bugs, and bullish traders.
And the biggest common threat was the idea that central banks have stretched economies too thin. They’re going to have to walk their hawkishness back, especially the Fed.
They also noted that gold would continue to act as an inflation and geopolitical hedge. And that central banks will keep stockpiling it.
Plus, other use value metals like silver, copper, and steel, especially electric steel, will resume their bullish trajectory in the near future, once the Fed pivots back to neutral.
Yes, nearer-term rate hikes will still create headwinds for gold and other metals.
But much of the Fed’s current policy impact on natural resources is already factored into the markets.
Industry leaders here noted how well gold has held up so far in 2022. And that other rare earth metals, like lithium and nickel, continue to offer opportunities, once the Fed pivots to a more neutral mode later this year.
Happy investing, and I will talk to you soon.