Gold is 'undervalued' and could see 'aggressive move to the upside,' despite Fed rate hikes - Luke Alexander

(Kitco News) - Fed rate hikes have put downward pressure on the gold price, but gold will eventually break out aggressively, said Luke Alexander, CEO and President of Newcore Gold (TSX-V: NCAU), a Vancouver-based gold miner.

Gold's price fell by 8.6 percent over the year, despite U.S. inflation peaking at 9.1 percent in June.

Alexander mentioned that as the Fed raises rates, the U.S. dollar would continue to perform well, which will be an "overhang on the gold price." He added that when "expectations start to change, I think that's when we'll start to see gold perform… It could be a very aggressive move to the upside."

"[Gold] is undervalued in terms of the momentum that I see in the next six months, in terms of inflation starting to ease, as well as some of the tensions that we're continuing to see across the world," he said.

Alexander spoke with David Lin, Anchor and Producer at Kitco News.

Newcore Gold

Alexander's company, Newcore Gold, is mining 216 square kilometers of land in Ghana, which is expected to contain 1.4 million ounces of gold.

Alexander said that operating in Ghana has helped Newcore deal with increasing costs across the mining sector.

"The cedi, which is the currency in Ghana, has actually depreciated against the U.S. dollar," he said. "A number of our expenses are denominated in cedi… so we've had a natural inflation offset as a result of the weakening local currency."

Ghana is the world's sixth-largest gold producer, said Alexander, as well as an ideal region for gold production.

"[In Ghana] you've got a very supportive government, which is important," he explained. "Security and very low political risk are the other two key factors, as well as getting things built… [There's] very good infrastructure, so that's one of the things we deleverage off of. We've got a paved road that runs through the middle of our project, to the town of entry. It's got a power line that runs beside it."

source: https://www.kitco.com/news/2022-09-16/Gold-is-undervalued-and-could-see-aggressive-move-to-the-upside-despite-Fed-rate-hikes-Luke-Alexander.html