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'Something will break' - Lawrence Lepard on gold price support

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(Kitco News) - Margin compression is to blame for why gold companies have performed poorly relative to the gold price, said Lawrence Lepard, founder of Equity Management Associates

Lepard spoke to Kitco in mid-September at the Precious Metals Summit 2023 held in Beaver Creek, Colorado.

The five-year projected gold price is about $200 lower than currently, but all-in-sustaining costs have been inflating annually at double digits.

"If those two things continue, the gold price doesn't go up, and the costs keep going up, margins are going to decrease," he said.

Lepard disagrees with the $1,700 forecast and expects gold to reach between $3,000 and $10,000 an ounce. He believes the market has bottomed and that gold company valuations can only get better.

Regarding the gold price, Lepard said, "I think the most important thing
that a lot of people have missed, and to me, it's an incredibly big signal that here we have the Federal Reserve has shoved the cost of money up 500-plus basis points, and yet the price of gold is within spitting distance of an all-time high."

"In the past, in old macro land, if that had happened, gold would have gotten hammered, and it hasn't. What that tells you is that gold is looking around the corner, recognizes that what they're doing is unsustainable, recognizes that there's going to have to be a pivot and a change of course because mathematically the Fed is trapped."

"In my opinion, there will be something that will break, it's probably within the next three to 18 months at the longest and at that point in time, they will have to reverse these policies, money supply will have to start growing again, inflation will come back with a vengeance, and gold will go through the ripple top of $2,100."

Kitco Mining's coverage of the Precious Metals Summit 2023 was sponsored by Newcore Gold.

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