The price of gold has see-sawed since the Federal Reserve raised interest rates on Dec. 16, and market experts debate if the action is good or bad for gold. Rob Chang of Cantor Fitzgerald Canada believes that after the small rate hike doomsayers are overstating their case and that gold should sell in 2016 for about $100/oz more than today. In this interview with The Gold Report, he argues that in today’s climate cash costs below $1,000/oz are the bare minimum requirement for survival. Happily, Chang highlights three gold producers and one silver producer that have what it takes.
The Gold Report: Some say the price of gold has for some time been suppressed by fear of a Federal Reserve rate hike. What do you think?
Rob Chang: Now that the Fed has finally raised the rate by a small amount at its December meeting as we expected, we will see a continued sideways trend for gold.
TGR: It has been suggested that the Fed has been exceedingly reluctant to raise rates because of fears that would kill the economic recovery and blow up the deficit.
RC: I agree absolutely. Raising rates is likely a bad idea, especially raising them significantly. The key question is whether the Fed will continue to raise rates, and if so, by how much. Higher rates cause issues across the board, issues that frankly I don’t believe the U.S. economy can handle.
TGR: Given the lack of a robust economic recovery since 2008, and the ever-increasing geopolitical instability throughout the world, the latest being a possible war between Turkey and Russia, are you surprised that gold has continued to fall rather than stabilize or rise?
RC: Yes. Given the geopolitical tensions you mentioned, one would expect the gold price to go up. To be honest, I don’t …read more