The Historical Truth
Despite widespread popular belief of a strong
negative correlation between interest rates and
the price of gold , a long-term review of the respective paths and trends of interest rates and gold prices reveals that no such relationship actually exists. The correlation between interest rates and the price of gold over the past half century, from 1970 to 2015, has only been about 28%, which is considered to be not much of a significant correlation at all.
A study of the massive
bull market in gold that occurred during the 1970s reveals that gold's run-up to its all-time high price of the 20th century happened right when interest rates were high and rapidly rising. Short-term interest rates, as reflected by one-year
Treasury bills (T-bills), bottomed out at 3.5% in 1971. By 1980, that same interest rate had more than quadrupled, rising as high as 16%. Over that same time span, the price of gold mushroomed from $50 an ounce to a previously unimaginable price of $850 an ounce. Overall during that time period, gold prices actually had a strong
positive correlation with interest rates, rising right in concert with them.....AND IN PICTURE TERMS.....
Read more:
The Effect of Fed Fund Rate Hikes on Gold | Investopedia http://www.investopedia.com/article...ct-fed-fund-rate-hikes-gold.asp#ixzz4syMBKFsQ
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