By the time you read this Commentary, chances are the Federal Reserve, America’s central bank, will have announced its decision to raise, if only by a slim quarter-percentage point, its key Fed funds interest rate. This is the rate banks charge one another in the interbank market for short-term funds – and it influences the whole spectrum of interest rates across the economy.

A quarter-point may be seem little to speak of . . . but it does represent a significant shift in the direction of U.S. monetary policy, a shift with important implications for equities, bonds, real estate, gold, and other investment assets.

Many gold investors, analysts, and pundits of all persuasions fear lower prices ahead for the yellow metal, hypothesizing higher interest rates will attract investment funds away from non-interest-bearing, such as gold, and into interest-bearing assets like money-market funds or Treasury bills, for example.

Indeed, over the past year or so, investor expectations that the Fed would soon start weaning the markets off near-zero interest rates, have already weighed heavily on gold and fueled higher prices in many other asset markets – notably equities, long-term bonds, the U.S. dollar, New York City apartment prices, fine art, and collectibles of all sorts.

But, if history is a guide, we should expect both rising gold prices and rising interest rates over the next few years, much like the 1970s, during which time the price of gold rose from $35 an ounce early in the decade to over $850 an ounce by January 1980.

The last time the Fed raised interest rates was in 2004 to 2006. During these years the Fed funds rate rose from one percent to five-and-a-quarter percent and gold prices soared from under $400 an ounce to over $700 an ounce – a 75 percent gain!

Gold may be out of favor on Wall Street . . . but not on Main Street, nor across Asia where, led by China and India, private-sector gold buying of physical gold, including small bars and bullion coins, continues apace.

Just as telling, a number of central banks, including China and Russia, both of which wish to reduce their exposure and reliance on the U.S. dollar, have continued to make large-scale purchases from month to month over the past year.

Around the world, this strong physical demand for gold simply has not been sufficient to keep gold prices steady, let alone propel them higher – while institutional traders and speculators have continued to short the metal, selling tons of “paper” gold in the futures and dealer-to-dealer markets.

This time around, higher interest rates will likely undermine the much over-valued stock and bond markets – touching off a rush into gold by the same players who were eager to sell the metal in the past few years.

We will keep our eyes on Wall Street and the reaction of equity prices to the Fed’s shift in interest-rate policy. A period of day-to-day gold price gains and simultaneous declines in the broad stock-market averages could be evidence of a shift in investor attitudes away from stocks in favor of gold – signaling a new era for the yellow metal.