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Fed's Last Rate Hike Is An Inflection Point For Gold - Franco-Nevada's President

Kitco News

(Kitco News) - Gold is already on a bull run and the last Federal Reserve rate hike will be an important inflection point for the precious metal prices, Franco-Nevada president and COO Paul Brink told Kitco News.

“We’ve really started the last gold bull market in 2000-2001 and then we hit a peak in 2012 … At the end of 2015 we hit $1,050 gold and now we are at $1,350. So, we are good three years into it. I would equate now to 2004-2005 in the last gold bull run,” Brink told Kitco News on the sidelines of the Gold Stock Analyst conference.

Franco-Nevada's president described the current atmosphere in the gold space as an exciting one, adding that the Federal Reserve’s next steps will be of the utmost importance for gold, especially if the central bank shifts towards no more rate hikes at all.

“In the last five years what we have been fighting is rate raises in the U.S. and a strong U.S. dollar. And we are at the point of inflection. I don’t know whether we’ve already seen the last rate raise or whether that last rate raise is later this year. But, either way, that will be a point of inflection that should be a great driver for the gold price,” Brink said.

The winter period is always a good time to gauge the health of the mining sector, Franco-Nevada's president added.

“At this time a year, you get a lot of excitement and enthusiasm in the gold market. The gold prices also tend to be at the highest and tend to settle a bit in the summer,” he noted.

For 2019, Franco-Nevada is focusing on growth, Brink pointed out.

“We are going into an exciting period of growth for Franco. We’ve been investing heavily in the last number of years — about $2 billion,” he said. “Our objective has always been to run a portfolio that is at least 80% precious metals, but we’ve always liked having that room of 20% for diversification, which gives us opportunities to grow when there are not a lot of opportunities in gold.”

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