24K99 News Sprott Inc. Managing Partner and Senior Portfolio Manager Ryan McIntyre stated that although the market generally expected the Federal Reserve to cut interest rates by 50 basis points in September, many economists actually expected a smaller magnitude. He anticipated that the price of gold would definitely surpass $3,000. He pointed out that the Federal Reserve's launch of a new round of easing cycle sends a strong signal, and the market urgently needs to hedge against U.S. sovereign debt.

Ryan mentioned that Federal Reserve Chairman Powell is walking a very narrow steel wire between supporting U.S. economic activity and managing high asset prices.

(Source: Kitco)

Although Powell has hinted that the Federal Reserve is not in a hurry to cut interest rates, Ryan suggested that investors should pay more attention to the actions of the Federal Reserve rather than Powell's statements.

He further explained, 'Clearly, the Federal Reserve cutting rates by 50 basis points is to avoid being seen as behind the situation.'

He added that there are many factors influencing the Federal Reserve's monetary policy. He expected that even though the inflation rate remains high, the central bank will still focus on supporting the economy.

'U.S. sovereign debt remains the biggest existential threat to the economy, and what the Federal Reserve least wants to see is an economic recession, as this will truly enlarge the deficit,' he said. 'This is the perfect environment for gold, since the Federal Reserve's inclination is clearly downward, and gold remains the simplest asset to protect wealth and capital.'

Although the Federal Reserve has introduced impressive initial measures to support economic activity, Ryan mentioned that he expects investors to turn to gold to diversify their portfolios is only a matter of time. Even with the start of a new easing cycle by the Federal Reserve, he expects the economy to deteriorate before improving.

He pointed out that the economy needs time to feel the impact of a new round of easing. He also noted that even with a 50 basis point increase by the Federal Reserve, interest rates remain at a significantly constrained level.

"Many different asset valuations are high, I think gold is a reasonable choice. Even with rate cuts, the economy has not yet emerged from its predicament. I guarantee something will happen that we are not talking about today," he said.

Ryan reiterated that sovereign debt remains the biggest threat to the global economy.

"Looking at the financial markets from a sovereign perspective, due to the high levels of global debt, gold is the only alternative as it is the only asset considered as a global mmf."

He continued to point out that the United States is in a dangerous position, as it is expected that the government will spend over 1 trillion dollars just to repay debt. He added that with debt repayment as a percentage of the Gross Domestic Product (GDP) exceeding growth expectations, the economy will face threats.

According to the latest economic forecasts from the Federal Reserve, the U.S. GDP is expected to grow by 2% in the next three years. Based on estimates from the Congressional Budget Office, this year's spending on servicing debt as a percentage of GDP is expected to rise to 3.1%.

"We cannot escape this fiscal predicament through growth, which is why all roads lead to gold," Ryan said. "Ultimately, the vast majority of investors will find a way to invest in gold. The price of gold will definitely surpass $3,000 per ounce, it's just a matter of time."