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"Inflation beast is out" and gold price looks to $3K in response to Fed's policy, says mining strategist

Kitco News  Friday December 10, 2021 16:47

The inflation beast is 'out of its cage,' and the Federal Reserve is now forced to respond. But a tighter monetary policy does not mean lower gold prices, says Christopher Ecclestone, Principal and Mining Strategist at Hallgarten & Co. And here's why.

"There's only one reason why the price of gold will go down, and that is if central banks soft-pedal on inflation, and that's what they have done so far," Ecclestone explained. "But as we see inflation continue to rise, particularly in the U.S. and the U.K., it has gotten out of control. Only higher interest rates will keep inflation down."

Ecclestone spoke to Michelle Makori, Lead Anchor and Editor-in-Chief of Kitco News, on the sidelines of the Mines and Money London conference. Hallgarten produces research on the natural resources sector.

In terms of inflation and its economic impact, Ecclestone stated that investors who have confidence that the Fed will be able to control inflation are mistaken.

"The inflation beast has gotten out, and it's going to take a lot of effort to get it back into its cage," Ecclestone emphasized. "This will ultimately impact property markets. It's going to impact companies that are highly leveraged. We are already seeing big property crashes in China that are linked to overextended property developers."