With gold prices rising from $1,061 to $1,343 per ounce over the first seven months of 2016, investors are no doubt wondering whether the yellow metal will hit $2,000 per ounce in the near future. Byron King of Agora Financial shares his thoughts.
With gold prices rising from $1,061 to $1,343 per ounce over the first seven months of 2016, investors are no doubt wondering whether the yellow metal will hit $2,000 per ounce in the near future.
Speaking to Byron King of Agora Financial, he believe’s that it would be a safe bet for gold to hit $2,000 in the next 18 months. “I think that the current price is the right price, but I think it’s low looking ahead. Looking ahead, the world is in deep monetary crisis, not just United States, not just Canada but the entire western world,” he said. “The bottom line is people are looking for safety.”
Listen to the interview, or read the full transcript below, for more of what King had to say.
INN: Hi, I’m Teresa Matich with the Investing News Network and here with me today is Byron King, editor of Rickards Gold Speculator with Agora Financial. Byron, thank you for joining me.
BK: Thank you. It’s good to be with you. Thanks.
INN: So Byron, I wanted to talk to you about the gold price. Where do you think it’s headed over the next year after this big run we’ve had?
BK: Well it’s been a run and I supposed you could say it’s been a big run, but really, when you look at the last six or seven months, it’s only been – pick a number, 20 percent. I mean, we went from a thousand and fifty dollar gold to a $1,300 gold.
INN: Yes. It’s about 22 percent or something.
BK: Yes. So it’s been a 22 percent run, let’s say. But if you look at the gold mining stocks, they’ve been leveraged to that gold price. So a lot of these gold juniors are up 100 and 200, to 300 percent. So why is that? Well because the gold miners are a leveraged bet on the fundamental price of gold.
So I think that the current price is the right price, but I think it’s low looking ahead. Looking ahead, the world is in deep monetary crisis, not just United States, not just Canada but the entire western world. The US, North America, European Union, Japan, and then the Middle East is an economic disaster in its own way and China, we keep waiting for that place to implode.
So I think that there is a general flight to safety going on across the world. And the very first place that people go in a fight to safety is hard assets, gold, silver and sometimes things like diamonds or whatever but that gets all exotic on us.
INN: So do you think gold could go as high as it was in 2011?
BK: It was up – it just was up right around $1,900 in 2011. I do think we are going to see that. I think a relatively – I would call it a safe bet for, let’s say the next 18 months, it’s $2,000 gold.
INN: And what catalysts can investors look for along the way in terms of that price rise?
BK: Well we’ve already seen some of the catalysts. I mean, we saw what happened the day after Brexit, the Brexit vote in the UK. I mean, very few people expected Brexit to pass although I – I’ll talk my own book here and say that in our newsletter, the Rickards Gold Speculator of agorafinancial.com — We did forecast that it was a high likelihood of passing and we positioned our portfolio as if it would pass. And we did very, very well in the days and weeks following Brexit. So that was just one event.
Another event would be something like the International Monetary Fund changing the definition of strategic drawing rights, or special drawing rights, to include more of a gold component. And all of a sudden, gold becomes a foundational element literally and figuratively, of the Global International Trading system and the Global International Settlement system between national accounts. If that happens, all of a sudden, a lot of people around the world are going to be looking around, “Where’s my gold?” And the worst might go, “There’s no gold.” Now the price is going to – the price could sky-rocket on something like that.
INN: Well, yes. I think what you’re talking about and what a lot of people have mentioned is that, it’s not so much the gold price that’s going to go up but the currencies are going to [go down].
BK: Exactly. The gold price will go up in a nominal sense. It is the value or the purchasing power of the currencies that will go down. It will be the value of US dollars go down or Canadian dollars or Australian bucks or Euros, what have you. I mean, Europe is already in a total mess in the sense of the divisions within Europe, the possibility of breaking — of Britain breaking out of EU. I mean, other countries that want out. The EU is this sort of Germanic French idea that’s – it seems to have reached an end point as well. The bottom line is people are looking for safety.
INN: Right. So what would you say to investors in light to all of this?
BK: Well if you don’t have any gold or gold mining shares, it’s time to wake up and smell that coffee to mix a few metaphors there. If you don’t have physical gold, get some. And I mean, physical, not gold certificates, not numismatic coins or whatever. I’m talking silver bullion, just silver eagles, silver maple leaves, what have you, gold eagles, gold maple leaves. If you say, “Well gee, they’re kind of expensive,” I say, “Yes, they are.” But try living through the next monetary zombie apocalypse without them. I mean, at least you will preserve your fundamental wealth and your savings from whatever we’re using with the time the wheels fall off the bus until the time they come up with some new form of currency whether it’s called a new dollar or whether it’s called seashells. I don’t know. But you want you want to have physical gold.
But then also, the real money to be made in terms of preserving wealth and getting and staying ahead of the game is in gold mining shares. And There are different levels and different tiers of that. Most people who are outside of the industry looking in, think of gold miners as Barrick (TSX:ABX) and Newmont (NYSE:NEM), you know the big name brands, Goldcorp (TSX:G), the big name brand miners. If you’re a little bit more savvy, you’ll think of, Oh, there’s Agnico Eagle (TSX:AEM), or, there’s Yamana Gold (TSX:YRI), or there’s Alamos (TSX:AGI), or something like – yes, all good companies, very good. But there are smaller companies, these Canadian junior miners that have the potential for multiple gains, hundreds of percent, multi-baggers, five baggers, ten baggers, fifteen baggers, which is not to say that everything will do that.
INN: Of course.
BK: Of course. You must be very, very selective and very, very disciplined as an investor to get in. Then you have to have a cast iron stomach because you’re going to have a roller coaster ride up, and then at the very top you need to remember to sell. Do not think that just because something went up really, really high that it’s going to keep going up even higher and higher and higher. Along the way – you buy low, as it goes up you sell a little bit along the way and you look to redeploy your funds.
But there’s a very vibrant, very productive, very innovative, small cap junior gold mining industry out there in which to invest. If you are the investor coming in, you need though to pay very close attention to who’s who, who’s doing what, you need professional level guidance either through a very savvy broker who deals with these kind of resource stocks or through a superb newsletter such as the one I write.
INN: Well on that note, I guess I will say, happy due-diligence-doing to everybody and thank you for joining me.
BK: Thank you. It’s a pleasure to talk with you.
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Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.