“Inflation beast is out” and gold is valued at $ 3,000 in response to Fed policy, says mining strategist


(Kitco News) – The inflation beast is “out of its cage,” and the Federal Reserve is now forced to act. But tighter monetary policy doesn’t mean lower gold prices, says Christopher Ecclestone, principal and mining strategist at Hallgarten & Co. And here’s why.

“There is only one reason the price of gold will fall and that is if the central banks ease inflation, and they have so far,” said Ecclestone. “But as we see inflation rising, especially in the US and UK, it’s out of control. Only higher interest rates will keep inflation down.”

Ecclestone spoke with Michelle Makori, Lead Anchor and Editor-in-Chief of Kitco News, on the sidelines of the Mines and Money London conference. Hallgarten conducts research in the raw materials sector.

Regarding inflation and its economic impact, Ecclestone stated that investors who trust the Fed to control inflation are wrong.

“The inflation beast has come out and it will take a lot of effort to get it back into its cage,” said Ecclestone. “This will ultimately affect real estate markets. It will affect companies that are heavily indebted. We are already seeing major real estate crashes in China associated with overwhelmed real estate developers.”

Ecclestone pointed out that once house prices begin to fall, investors will look to gold. “If inflation continues to rise, people will be trying to figure out where to put their money, especially if house prices stop rising or start falling,” he added. “In most western economies, real estate has been a great haven for investors for the past 30 years. You will be looking for the next safe bet.”

Ecclestone found that most investors use gold as a method of saving. “Gold has traditionally been a hedge against inflation. There is a misconception that higher interest rates would affect the price of gold because people supposedly borrow money to buy gold, which is a completely wrong construct,” he said. “Most people use gold as a way of saving.”

Over the next year, Ecclestone expects gold to hit $ 2,000 an ounce and then rise to the $ 3,000 level over the next four years.

“Ultimately, gold has to go up because people don’t believe in keeping their money in fiat to protect their currency,” he said. “I wouldn’t be surprised if we saw gold above $ 2,000 in the next 12 months. My five-year outlook for gold is $ 3,000 an ounce.”

Ecclestone predicts silver will move back towards $ 30 next year and then move to $ 40 by 2026.

Check out the full video above to find out more about other exciting commodity games and why uranium has the greatest upside potential. Follow Michelle Makori on Twitter: @MichelleMakori

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure the accuracy of the information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is for informational purposes only. It is not an invitation to exchange goods, securities or other financial instruments. Kitco Metals Inc. and the author of this article assume no responsibility for any loss and / or damage that might arise from the use of this publication.


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