Eric Strand, founder of AuAg Funds, states that gold investors may still face volatility in the short run. Yet what the market should truly focus on is not “whether the Fed will keep raising rates”, but whether higher interest rates can resolve current‑day inflation. In his view, as investors gradually realise rate hikes cannot curb inflation driven by commodity and input‑cost pressures, gold prices will eventually resume their long‑term uptrend.

Strand points out that markets have already priced in higher interest‑rate expectations, which have underpinned the US dollar and weighed on gold. Nevertheless, he believes investors are merely reacting to high inflation without identifying its root drivers. Unlike over‑heated demand, present‑day inflation stems largely from rising commodity prices and production input costs. Mere rate hikes cannot bring inflation meaningfully lower; instead they add fresh financing and operational burdens atop existing cost pressures.

Inflation Root Cause Does Not Lie in Excessive Demand

Strand states plainly that raising interest rates is “ineffective” amid cost‑push inflation, for it does not eliminate inflation itself. He stresses this is not a scenario where consumers spend too much and need cooling. Rather, costs across the whole economic system are climbing. Further monetary tightening will only place heavier burdens on businesses and households.

Although gold has come under pressure amid market bets for tighter monetary policy, Strand holds that current bearish positioning may fuel the next leg higher for precious metals. His strategy is straightforward: wait until markets recognise their misjudgement, and prices will naturally revert to their proper trajectory.

Debt Burden to Overshadow Hawkish Rhetoric

Strand doubts whether the Fed can genuinely deliver on its hawkish rhetoric. He describes the current stance as “talk without action”. While the Fed needs to preserve its anti‑inflation credibility, economic and fiscal realities may ultimately prevent genuine aggressive monetary tightening.

In his opinion, the bigger issue lies in the US government’s ballooning debt load. With federal debt surpassing USD 40 trillion, the government increASIngly requires lower long‑term borrowing costs to keep debt‑interest expenses manageable. Strand argues this reality will ultimately override the Fed’s anti‑inflation rhetoric.

He remarks that authorities need to suppress long‑term interest rates. “To me it is clear: they will have to implement quantitative eASIng, no matter what label they give it.” He also notes that hoping to grow out of debt fundamentally conflicts with aggressive monetary tightening. To foster economic expansion, consumption cannot be crushed via rate hikes; the economy must “run at full speed”.

Gold May Be Set for a Bigger Rally

Strand further comments that inflation itself may even help ease debt burdens, as rising nominal economic activity reduces the real value of outstanding debt. He expects the Fed will resist this outcome as long as possible, yet may eventually be forced to accommodate Treasury Department demands to contain long‑term borrowing costs.

He adds that investors are paying growing attention to long‑end US Treasury yields. Elevated yields have already made it harder for the government to finance peRSIstent deficits. Should bond demand keep deteriorating, policymakers may eventually turn to fresh quantitative‑eASIng rounds or other mechanisms to depress long‑term yields, essentially amounting to yield‑curve control.

For gold, Strand views this as a catalyst for a larger upswing. Markets will keep reacting to inflation prints and shifting rate expectations, yet investors ought to focus on structural factors beyond monetary‑policy reach: elevated commodity costs, rising metal demand, massive government debt, and the practical need to keep borrowing costs contained.

He mentions gold advanced roughly 10% in August, which in his eyes is merely a “prelude” to subsequent moves. Once investors are forced to unwind positions built around higher interest rates and a stronger US dollar, gold may stage a more pronounced advance. He even forecasts gold could “eASIly rally another 20%‑30%” over the remainder of the year.

Mining Stocks Still Offer Appeal

For investors who missed gold’s prior run‑up, Strand sees recent pull‑backs as a second entry opportunity. He warns that failure to get exposure now risks missing the move again.

Strand remains distinctly optimistic toward precious‑metals mining equities. Despite their recent strong performance, valuations remain attractive relative to underlying commodity prices. Higher gold‑and‑silver prices over past years have improved miners’ balance sheets and lowered financial risks.

He also points out that mining shares stay relatively cheap versus commodity prices even after recent gains. Insufficient exploration and scarce new‑mine development will continue to cap future supply. “It is a fantastic situation,” he states. “We are not finding more gold, nor more silver.”

From Strand’s perspective, gold’s investment thesis is no longer limited to near‑term Fed policy, but stems from broader structural backdrops: US‑dollar weakness, mounting US government debt, constrained mine supply, plus rising metal demand from defence, artificial‑intelligence and infrastructure sectors. The US dollar is unlikely to sustain strength. To service debts and uphold bond prices, authorities will need to create more money going forward. Meanwhile, accessible underground metal reserves are limited even as systemic metal demand keeps climbing.

Accordingly, for him the question is no longer whether gold will rise, but when markets will acknowledge that rate hikes cannot resolve inflation’s root drivers, and that the Fed may ultimately have little choice but to accommodate the government’s growing debt burden.