Luke Alexander, CEO and Chairman of Newcore Gold, a Vancouver-based gold miner, says the Fed’s rate hikes are putting downward pressure on the gold price. But he notes that gold will eventually explode aggressively. According to Matterhorn Asset Management Commercial Director Matthew Piepenburg, despite Jerome Powell’s hawkish statements, the Fed will have to rotate and lower rates.
“A very aggressive upward move of the gold price is possible”
cryptocoin.com As you follow, US inflation peaked at 9.1 percent in June. Despite this, the price of gold fell 8.6 percent during the year. Luke Alexander says the US dollar will continue to perform well as the Fed raises rates. He also states that this will be an issue on the gold price. In this context, Alexander makes the following statement:
When expectations start to change, I think then we will start to see the performance of gold. A very aggressive upward move is possible. Gold is undervalued in terms of momentum. Because, with some tensions that we continue to see around the world, I predict that inflation will start to loosen in the next six months.
“Fed will have to step back”
Fed Chairman Jerome Powell made hawkish statements at the recent Cato Institute Monetary Conference. Despite this, the Federal Reserve will have to rotate and lower rates, according to Matterhorn Asset Management Commercial Director Matthew Piepenburg. This is largely due to the excessive public debt of the US government. Matthew Piepenburg underlines the following on the subject:
We have public debt of over $30 trillion. In addition, its ratio to GDP is 125%. The US government’s bar tab cannot afford rising interest rates. I don’t see a scenario where we can pay for this.
Piepenburg also suggests that if inflation were measured against the 1980 criteria, it would have been close to 18% or 19%. Since 1980, the composition of the goods the Bureau of Labor Statistics uses to calculate the CPI has changed. Official US headline inflation was 8.3% in August.
“The Fed also wants inflation to be higher than interest rates!”
His comments echo the comments of other analysts, who have warned that the Fed’s rising interest rates are making it harder for the government to finance its spending or fund its authorization programs. “Powell is not fighting inflation,” Piepenburg says.
The Federal Reserve increased the Fed Funds Rate (FFR) by 225 basis points for the year. It is also expected to raise rates by 75 basis points at its next meeting on September 21. The current FFR target range is 2.25% to 2.5%. Piepenburg claims that rate hikes are ‘wrong’ because the Fed has no intention of fighting inflation. Based on this, he makes the following assessment:
When you have 8% to 9% CPI inflation, you can’t fight it with a 4%, 3%, or even 5% Fed Funds Rate that we can’t afford. The truth is that like most central banks throughout history, the Fed wants inflation to be higher than interest rates.
“From now on, the gold price will reach new heights”
According to Matthew Piepenburg, the United States is a debt-ridden nation with its back against the wall. So, to avoid inflating its debt, the Fed will lower the Funds Rate. Piepenburg thinks Powell is chasing inflation. He also claims that the only reason they are raising rates today is not to fight inflation. He notes that this is what they do to have a reason to cut rates once the actual recession becomes an official recession. Piepenburg says the following about the price of gold:
After the dollar breaks and weakens, the gold price will reach new highs. The gold price is currently being suppressed at artificially low levels.
