Gold fared best when it entered Fed-rate-hike cycles low in secular terms and they were gradual.

fed liquidating hedge fund-46

Just a couple weeks earlier in the Feds Beige Book economic report that supports FOMC meetings, one of the major reasons cited for regional US economic weakness was the strong US dollar.

Something like half the revenues of the elite S&P 500 component stocks come from abroad, making the US dollar already near 13.7-year secular highs a big threat to stock markets.

Yet it did, with the US Dollar Index rocketing 1.0% higher after that FOMC decision to a new 14.0-year secular high!

That epic dollar strength after the Fed was more hawkish than expected on rate hikes in 2017 is what triggered that heavy gold-futures selling.

GLD capital flows are absolutely essential for golds outlook.

This first chart superimposes GLDs physical gold-bullion holdings held in trust for its shareholders on the gold price.

So this week Im going to focus on the extreme selling in gold-ETF shares seen since the election.

The world-leading and globally-dominant gold ETF remains the venerable American GLD SPDR Gold Shares.

The dot plot the Fed released at that initial hike forecast four rate hikes in 2016. Since futures speculators were so terrified of Fed rate hikes a year ago, I researched the entire modern history of golds performances in the exact spans of Fed-rate-hike cycles. Before this current one there had been 11 since 1971.

Golds average gain through all of them was 26.9%, nearly an order of magnitude greater than the S&P 500s 2.8% average gain in all of them!

But just like this year, the Fed wont hike so aggressively.