Brien Lundin, Editor of the Gold Newsletter, joins us to share his thoughts on the recent move higher in the in the commodities sector and the precious metals, based on the war premium, higher persistent inflation, and central bank policy. We start off by discussing the effects of these headline driven markets, and how geopolitical news will eventually fade for more relevant macroeconomic and financial factors as the year continues to unfold.
We discuss that beyond the Fed getting ready to kick off their rate hiking cycle that, it really is more important to look at how long it will persist, how high the Fed’s fund rate can be raised, and at what point the central bank will have to reverse policy. It is that point where the generalists investors realize there isn’t much more the Fed can do to tame inflation without making the debt unserviceable that may spur more investors into positions into gold. Brien believes that somewhere around a Fed funds rate near 2% would be that that tipping point and believe it is about 12-18 months out.
Next we shift over to the action in the mining stocks and outline the kinds of stocks he’s currently recommending to subscribers in The Gold Newsletter, and they are mostly focused around exploration stocks with promising drill programs, or optionality plays with developers that have ounces in the ground that will be rerated higher along with rising metals prices. Brien also noted that higher cost producers have a similar optionality torque to rising metals prices, as their margins improve.