Top Stories This Week: Powell Speaks at Jackson Hole, Gold Reacts

Gold market watchers spent most of this week waiting to see what comments would come out of the annual central bank symposium in Jackson Hole, Wyoming.

Held virtually for the first time this year due to COVID-19, the event brought a much-anticipated policy update from US Federal Reserve Chair Jerome Powell.

In a Thursday (August 27) morning speech, Powell honed in on inflation, saying that the Fed will try to achieve an average inflation level of 2 percent over time — that means if inflation has been under that level, the central bank may aim to even it out later with a higher number.

“In seeking to achieve inflation that averages 2 percent over time, we are not tying ourselves to a particular mathematical formula that defines the average. Thus, our approach could be viewed as a flexible form of average inflation targeting” — Jerome Powell, US Federal Reserve

Powell called the move a “robust updating” of Fed policy, and the reaction from gold was swift — it briefly spiked above US$1,970 per ounce before falling back to around US$1,920.

Despite the abrupt jump and drop, experts for the most part seem to believe the Fed’s actions will be beneficial in the long term for the yellow metal.

For one thing, gold is known as a hedge against inflation, meaning its appeal increases as inflation rises. For another, the consensus seems to be that in this environment the Fed will hold rates lower for longer — another situation that is typically positive for gold.

With all of that in mind, we asked our Twitter followers this week for their thoughts on what Powell’s comments could mean for gold. Overall, respondents overwhelmingly said the Fed’s new stance on inflation will be positive for the yellow metal in the long term.

We’ll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts!

In the cannabis space this week, INN’s Bryan Mc Govern spoke with Dan Ahrens from AdvisorShares. Ahrens manages the AdvisorShares Pure Cannabis ETF (ARCA:YOLO), and he expressed his frustration with continued misinformation in the marijuana industry.

“There’s a great deal of flat out stupidity in cannabis investing out there. And more people need to get educated about investing in the right companies” — Dan Ahrens, AdvisorShares

In his opinion, investors still aren’t as educated as they should be about cannabis — for example, conversations about state-level legalization in the US often involve companies that aren’t able to enter those markets. He also noted that some of the biggest and most well-known names in the space can sometimes be the worst performers.

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.