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D E C E M B E R / J A N U A R Y 2 0 1 8 www.resourceworld.com 25 The first and near-term catalyst gold inves- tors are watching is the December 12 th US Federal Reserve's announcement on the short- term interest rates. There have been strong hints the rates will rise, which normally would not be good news for gold prices. "It's a case of buy on the rumour and sell on the facts," says Preston. "We have consis- tently seen double-digit percentage gains of gold stocks on a rate hike, which is odd because higher rates would ordinarily be seen as a negative for gold," as the metal would be less attractive compared with interest rates. What actually happens when the Fed rate hike is highly anticipated, as it is in December, speculators go long on the US dollar and con- versely short gold. When the rate hike actually happens they close out their position by selling their dollars and buying gold. The Federal rate increase was the impetus for year-end increases in gold prices in 2015, 2016 and, if the same happens in 2017, could set off multi-month bull runs on gold and silver stocks. Gold prices are also sensitive to political uncertainty and given the current period of ele- vated uncertainty, both in terms of US domestic policy and in foreign diplomacy, gold prices could see additional support in early 2018. Outside the US, traders are watching events in Catalonia, the UK's exit from the European Union and the recent crackdowns on corrup- tion in Saudi Arabia for signs of uncertainty – sending investors to gold as a safe haven. The next move on gold will be driven by an equity market correction, Peter Grosskopf, CEO of Sprott Inc. said during a recent interview with Bloomberg. "It's a pretty safe bet that if equity markets start to look volatile and dangerous then a lot of money will flow into gold as a hedge to that." Strategists from Toronto-based Sprott see the potential for gold prices to break past US $1,400/oz by the end of the year under the right conditions. They also see potential in other metals including silver, platinum, palla- dium, cobalt and lithium. "There are a lot of gold investors sitting on the sidelines right now," says Preston. "With the international markets doing so well, they are not as likely to take the risks to invest in gold when they are making 20-30% returns in the market." Global strategists from Citigroup and JP Morgan have both warned about events that could affect the rally in equities. Citigroup pointed to rising rates as a threat, and JPMorgan analysts said they are concerned second-half earnings may not be as robust as the market is anticipating. "We note that in the With an upswing of major economies squeezing metal supply, predictions of a US market correction and international political uncertainty, the conditions exist to drive investors back to the mining and mineral explo- ration sector next year.