The Gold Report: The price of gold is flirting with a five-year low. Do you attribute this solely to the strength of the U.S. dollar, or are there other factors at work?
Ralph Aldis: There are other factors. Most important is the strength of the equity markets. Looking at a six-year window, we have seen, for the third time in the last hundred years, the highest returns for such a period. This happened before in 1929 and 1999. These phenomenal returns have been fueled not by fundamentals but rather by the U.S. Federal Reserve, which is trying to jumpstart the economy.
All this has taken people's eyes off gold, but it won't go on forever.
TGR: The bear market in gold equities is now four years old. This means lower gold production and less exploration. Gold production from South Africa has collapsed. Shouldn't lower gold production result in a higher gold price? Continue reading "How the Five Principles of Capital Allocation Can Mean Gold Mining Success"
The Gold Report: A recent Raymond James research report refers to silver as the "devil's metal" What is the story there?
Chris Thompson: Silver is much more volatile than gold. Typically when we see a weak day for the gold price, silver has a terrible day. Likewise, if we see a strong day for gold, typically silver delivers exceptional performance. Because it's so volatile, we term it the devil's metal.
TGR: If the selloff in precious metal equities is over and this is the bottom, how long do you expect the flat-lining to persist?
CT: At Raymond James, in the near term we see gold trading rangebound between $1,200 per ounce ($1,200/oz) and $1,300/oz and silver trading rangebound between $16.50/oz and $18.50/oz. We are not seeing fundamentals that would prompt a price outside of those respective ranges. We expect current price strength to continue to the end of Q1/15, followed by some weakness into the summer and then more strength toward the end of the year.
TGR: In a recent research report you warned investors about 2015 possibly being the "Year of the Dodo" for certain precious metal producers. Please explain. Continue reading "Avoid Dodos and Find Gold and Silver Miners that Can Soar"
The Gold Report: Jeff Clark, senior precious metals analyst at Casey Research, recently wrote in an article titled "Time to Admit that Gold Peaked in 2011?" that countered a chart making the rounds showing gold matching its 1980 inflation-adjusted dollars peak in 2011. The chart implies we should expect a decade or more of lower prices. Aside from the fact that John Williams of Shadow Government Statistics might have a problem with how inflation was calculated, how are gold's fundamentals different today than they were in 1984?
Louis James: The fact that things are different today than in the 1980s is a really good point. The argument over methodology almost doesn't matter. Even if it were true that the gold price of 2011 matched the inflation-adjusted gold price of 1980, that wouldn't mean that gold has to go down the way it did in 1980. There wasn't a near collapse in the banking sector back then. There wasn't the Lehman Brothers upset. The government did not triple the money supply. We're dealing not with apples and oranges, but apples and whales.
TGR: If history is not a map for the future, is John Williams correct that we are getting ready for hyperinflation? Continue reading "Louis James: Are You Ready for an Early Shopping Season?"
The Gold Report: Low interest rates, a cornerstone of recent modern Western economic policy, have proven positive for gold over the last several years. What do you see as the three primary price drivers for gold this year?
Rob Cohen: The primary price driver is global liquidity. That is fed by balance-sheet expansion in many Western countries and foreign exchange reserves, typically the result of trade deficits built up in countries such as China.
Number two is real interest rates. The Federal Reserve could tighten rates, but we don't know where inflation will be. Negative real rates are very good for gold. Mildly positive real rates are not harmful for gold. Positive real rates above 2% can stall the gold price.
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Number three is geopolitical crisis. Strife can get priced in and out of the gold price. Continue reading "Robert Cohen's Three Drivers for the Gold Price in 2014"