Gold has pulled back just as we expected, but I’m expecting it to renew its rally later this week.

March 22, 2023

Dear Fellow Investor,

The correction in gold that we’ve been expecting this week has continued to play out.

Yesterday gold dropped $38, or nearly 2%. That this was purely a “gold-only” event was evidenced by the fact that silver only dropped about 0.7%. In other words, silver did not confirm the move.

Today, both metals are flat as I write, as investors around the globe await the Fed decision with bated breaths.

As I told you on Monday, we need to expect a few jiggles in the uptrend, as nothing goes up in a straight line.

Notably, this move in gold is particularly susceptible to volatility, as concerns over the state of the U.S. and global banking system will ebb and flow as new failures are countered with new government assurances and rescue programs.

There are two aspects to this situation that we’ll need to remember:

1) The repercussions from perhaps the most rapid and severe monetary tightening cycle ever experienced — hard on the heels of the easiest monetary cycle in history — are only beginning to be felt. You can count on more “cockroaches” being found in the kitchen.

2) The next phase will involve the policy reaction from the Fed and other central banks. In that regard, I expect the Fed’s next rate hike, likely to be announced in a few hours, will be their last.

I fully expect the Fed to announce a quarter-point hike later today, for the sake of credibility. The banking crisis has cooled enough to allow this.

But I also expect them to open the door for a pause at their next meeting...while maintaining that they’ll remain data dependent and fully committed to getting inflation down to their target of 2%.

As I’ve noted, a Fed pause, even a prelude to a pause, will provide a shot of adrenaline to the markets. That’s why U.S. stocks have been rebounding this week.

I expect gold to join equities in rallying once the anticipated Fed pause becomes clear...because it will also be evident that inflation will be nowhere near the Fed’s target level when they stop hiking.

This will be an exceptionally bullish background for gold, silver and mining stocks.

We still have an opportunity to get ready, as many of the top junior miners are still trading near historic lows. My advice, again, is to take advantage of this opportunity.

Because it may be our last.

All the best,

Brien Lundin
Editor, Gold Newsletter
CEO, the New Orleans Investment Conference