I have heard this many times....That AUY stock could increase dramatically when this takes place. Why? On " Fast Money " last week, I heard that a Fed Funds rate cut would mean the price of gold will soar....that would be great as I'm a holder of AUY, but why would this be so? Could someone smarter than myself please elaborate? Thanks!
I think it's because a lower Fed Funds rate means everyone who buys Fed bonds, tbills, etc. earns less interest. Therefore, they move to other investments and the dollar declines. A decline in the dollar directly impacts gold in a positive manner. The bottom line is the dollar hates rate cuts (implies slowing economy), which means gold loves them.