Gold Bugs Should Take the Fed's Discount Rate Hike As a Warning

On Thursday afternoon, the Fed raised its discount rate -- the rate it charges to banks for direct loans. As I wrote in October, the Fed has been broadcasting its intention to tighten the money supply since the fall. Yet despite all that advance warning, Friday morning's strengthening of the dollar and the subsequent fall in commodities -- which trade in the now-stronger dollar -- suggest that investors were surprised. The Fed's next moves will be especially painful for one class of investor, in particular: gold bugs.