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(Kitco News) - Brien Lundin, editor and publisher of Gold Newsletter, said many investors are missing a broader truth, that the current interest-rate hiking cycle has peaked.
Lundin spoke to Kitco at the Rule Symposium Natural Resource Investing 2023 show held in Boca Raton, Florida.
He said the markets are starting to look ahead to a Federal Reserve pivot involving rate cuts. As for what prompts the Fed to reduce interest rates, Lundin believes it will be "something breaking in the markets," namely the lagging effects of interest rate hikes.
He noted there is a lot of debt still being financed at under 1%, but once that debt is reset to a higher rate over the next six to 12 months,
"The effect of that is going to be like an axe to the head of these zombie companies. It's going to put more and more companies under, and I think that kind of a thing, in addition to possible effects of the banking system, could be what's going to force the Fed to go back to loosening monetary policy."
As for what awakens slumbering gold stocks, Lundin said the market needs "a sustained uptrend" in the gold price, which engenders FOMA (fear of missing out).
Kitco Mining's coverage of the Rule Symposium Natural Resource Investing 2023 was sponsored by G Mining Ventures.
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| 'If you are going to take big risks, it has to be for big rewards' - Rick Rule on resource investing |
