Precious Metals

Gold Investing

Interest rates will continue to be a point for gold-focused investors to watch, says Byron King of Agora Financial in this interview.

When the US Federal Reserve cut interest rates at the end of July, the move initially sent the gold price below US$1,420 per ounce.

Speaking just after the cut was announced, Byron King, editor of Whiskey & Gunpowder at Agora Financial, brushed off concerns about the yellow metal’s decline.

“Gold promptly sold off by US$17, US$18 an ounce. You know, it’s buy the rumor, sell the news. That’s the immediate daily issue,” he said. “Long term, gold is not, shall we say, fully priced — gold does not reflect the inherent value. Gold has plenty of room to move upwards in terms of its use as a monetary metal.”

King was proven right, perhaps more quickly than he anticipated. Since the Fed’s rate cut, gold has shot through US$1,500 on the back of increasing tensions between the US and China and other issues.

In terms of where gold could be headed next, King suggested that interest rates will continue to be a point for investors to watch.

“This is sort of a race to the bottom in terms of how low can we go interest rate wise. And so expect to see globally negative interest rates, much more so than we already have,” he said.

“When negative interest rates hit the US, I think that the American mentality is going to be such that all these tens of millions of people who know nothing about gold are going to become interested in it overnight — that’s how fast it’ll happen.”

King explained that, when gold moves, typically royalty companies and major miners will move first, but the place to be for big gains is juniors. “That’s much higher risk, but much higher return.”

Watch the video above for more from King on gold, or click here for his Sprott interview on rare earths. Our full playlist for the event can be found on YouTube.

Don’t forget to follow us@INN_Resource for real-time updates!

Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.

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