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Top Stories This Week: Fed Finally Pauses, Rob McEwen Talks Gold and Gold Stocks
Jun. 16, 2023 11:15AM PST
The US Federal Reserve left interest rates unchanged at its latest meeting. Meanwhile, Rob McEwen of McEwen Mining shared his thoughts on the outlook for gold and gold stocks.
The gold price was on the rise ahead of this week's US Federal Reserve meeting, approaching the US$1,960 per ounce level prior to the central bank's update. Although it declined in the immediate aftermath, sinking below US$1,930 on Thursday (June 15), the yellow metal was back around US$1,960 by the time of this writing on Friday (June 16) afternoon.
Market participants were wondering whether the Fed would hike again or leave rates unchanged, and ultimately those in the second camp ended up being correct. The Fed kept the target range for its benchmark borrowing rate steady at 5 to 5.25 percent.
According to a statement from the Fed, this move will allow it to "assess additional information and its implications for monetary policy." An update to the Fed's dot plot, which shows where each Fed official thinks the federal funds rate is going, suggests that the central bank is likely to raise by a further 50 basis points, probably spread across two more hikes.
The central bank has already hiked further and longer than many people thought it would or could, and market participants will be watching closely to see what happens at the next Fed meeting, which is scheduled to run from July 25 to 26.
Peter Grandich of Peter Grandich & Co. recently said that at this point he doesn't expect a cut at any point this year.
"I clearly would bet that there's no cut, barring something totally unforeseen in the world, this year. The earliest possible cut, and that's if there's a fairly significant recession, which is still questionable, would be in 2024," he commented.
McEwen talks gold and gold stocks
Rob McEwen of McEwen Mining (TSX:MUX,NYSE:MUX) is a well-known figure in the gold industry, and he remains optimistic on the metal's future. When asked if gold is just taking a breather before it takes off again, he said yes.
In a recent interview, he said that while discussions around potential declines in interest rates and inflation have diverted some attention from gold, the burden of government and corporate debt remains massive.
"And then the monetary stimulation. There's still the world awash in liquidity, and people go, 'Well, where do I put my money?' You're seeing central banks — and a lot of them are part of the BRICS group that Russia and China have been putting together — have been buying gold, and they've been buying it with the dollars they held in their reserves. I think you're going to see more of that happening. There's going to be more turbulence in the currency market as we go forward," he said.
McEwen also spoke about how gold stocks are performing right now, reminding investors that while the summer months tend to be a slow period, the future should bring gains. Here's what he said:
"I'd say, 'Don't get disheartened. This is a space you want to be in.' Usually, right after the PDAC, the gold stocks go down for a period, and then through the summer they wander around not really getting too excited. But come September, they take off again. So now is the time to accumulate rather than bemoan the fact that it's down" — Rob McEwen, McEwen Mining
Click here for the full interview, which also includes commentary from Michael Meding of McEwen Copper.
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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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