Gold's Crucial Breakpoint: Three Things Must Happen First

Source: YouTube

(Kitco News) - The long-term structural trend is for global yields to rise, said Julian Brigden, co-founder of Macro Intelligence 2 Partners.

Brigden spoke to Kitco mid-November at the 2023 Precious Metals Summit Zurich event.

He said the three wars happening right now — the U.S.-China trade war, the hot war with Russia, and war in the Middle East — along with climate change, entail “vast quantities of government spending” that will have to be financed, putting upward pressure on yields.

Taking a contrarian view, Brigden thinks the Fed is a long way from cutting rates.

“This idea that we've risen them now, and the next thing is cutting [them]...I think is utterly wrong,” he said.

“The intention from all my policy context is this is going to take a long, long time to grind things out," he said. "When I mean long, I'm not talking necessarily months. I'm talking potentially years of restrictive rates with sub-trend growth, and that's bad for all assets.”

He argues that rates are not yet restrictive enough in the United States due to there being a lot of momentum in the economy and robust stock markets.

Brigden is bullish on gold but in a tight monetary environment. Three things must align for gold to make a big move.

“I think for gold to really break out you have got to see the equity market break down in the U.S., you've got to see the Fed then truly step back and start to cut rates and the dollar to go [down]. That I think would set you up for this solid breakout that we want.”

Special coverage of the 2023 Precious Metals Summit Zurich is brought to you by Vizsla Copper Corp. (TSXV:VCU).

Originally published by: Andrew Topf on Kitco News