The gold spot price hit another record high, touching US$2,142.30 per ounce during trading on Tuesday (March 5).
The precious metal was a hot topic at this year’s Prospectors & Developers Association of Canada (PDAC) convention, where the Investing News Network (INN) had the opportunity to chat with notable gold investment experts.
Fed interest rate cuts bullish for gold
Lobo Tiggre, CEO of IndependentSpeculator.com, told INN at the conference that he's closely watching the US Federal Reserve's upcoming rate-cutting cycle, which is likely to be positive for gold.
“That portends very bullish things for not just the metal, but for the associated equities," he said.
When asked about Bitcoin, which also reached a fresh all-time high this week, Tiggre said that as a risk asset it's gaining steam from Fed speculation as well. However, he said it's probably being impacted more by the approval of US spot Bitcoin exchange-traded funds and the cryptocurrency's upcoming halving event.
Brien Lundin, editor of Gold Newsletter, echoed Tiggre’s sentiment on the impact upcoming Fed rate decisions are having on the gold market. “The big picture is that the market is now trying to price in a Fed pivot,” he said.
However, Lundin noted that expectations keep shifting as to when the next lower rate cycle might begin and that has caused some volatility in the space. But investors can be rest assured that it will be this year.
“I think the markets are missing the big picture largely, and that’s the fact that the Fed will have to pivot this year because of the cost of servicing the federal debt at these interest rate levels,” he explained. “The Fed will have to pivot and other banks will follow suit. When that happens gold will do very well.”
When will gold stocks finally move?
With the gold price historically high, market participants are hoping much-beleaguered gold equities along for the ride.
Commenting on the wide gap between the value of gold and the value in gold mining stocks, Rick Rule, proprietor at Rule Investment Media, told INN, “I have not seen as great a disconnect between the gold price and the gold stocks in my career.” And yet, he believes that “the fact that nobody wants to be in gold equities is their greatest asset.”
Tiggre agrees. “Gold stocks are still not getting any love,” he acknowledged. “Of course, I see that as an opportunity.”
In terms of timing when to get into gold stocks, the experts suggested getting positioned before the Fed makes its first rate cut. Lundin told INN that undervalued gold stocks can be had at bargain prices right now, and investors would do well to be positioned in gold equities for when the gold price starts its next leg up on rate cuts.
Gold stock investors have been waiting for their holdings to move for some time, and Lundin said he thinks they'll start taking off when the yellow metal’s price gets past US$2,150 and demonstrates a clear breakout on the charts.
"This will draw in generalist money that I think will propel the price to a higher level,” he explained, adding that he sees gold reaching US$2,300 this year. “I think the money is going to flow, and I think that will very quickly lead to a big rally in the mining stocks.”
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Securities Disclosure: I, Melissa Pistilli, 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.
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