Why This Precious Metal Could Rally As Fed Continues Rate Hikes Amid Elevated Inflation

With movements in the U.S. dollar, is could be worth looking at how precious metals are responding and whether one could find inflated returns in the long run. On CNBC's "Options Action," Mike Khouw of Optimize Advisors said that when currencies weaken, “we often think of the metals, industrials and precious metals rallying.”

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“You might think that the rally that we’ve seen in silver recently … would be done. My thinking though is that we might actually still have some more upside,” Khouw mentioned. Those who do not already have exposure to silver may wonder whether it is a good idea to “chase it here,” he added.

“Right now, the Fed is really trying to navigate a very sticky situation,” Khouw said.

“While we are looking at these conflicting datapoints, inflation versus employment,” there are some other considerations, like the implications of higher rates, he said, “including the fact that governments have taken on tremendous amounts of debt over the course of the last several years.”

“That is going to create some real pain if rates go considerably higher. So, I have a feeling that we’re actually going to end up with an inflation rate that is much higher than the target rate,” Khouw stated. “That’s good for precious metals,” he added.