Over the past four decades, there have been 10 major rate tightening cycles by the Fed. While some periods saw pullbacks in gold prices, as many periods still exhibited strong positive returns, notably in the 1977 to 1980 and 2004 to 2006 periods. The strength in gold may be attributed to factors like rising inflation expectations and rising rate-induced volatility in equities that pushed investors to safe haven assets.
Investors who want access to precious metals may consider a number of physically backed metals-related ETFs as a way to diversify a traditional stock and portfolio, including ETFS Physical Swiss Gold Shares (NYSEArca: SGOL), ETFS Physical Silver Shares (NYSEArca: SIVR), ETFS Physical Platinum Shares (NYSEArca: PPLT) and ETFS Physical Palladium Shares (NYSEArca: PALL). ETF investors can also use the ETFS Physical Precious Metals Basket Shares (NYSEArca: GLTR) as a catch-all of all four precious metals.
Tom Lydon’s clients own shares of GLD.