As investors gravitate toward mainstream equities, mining stocks have become “grossly undervalued,” said Chris Marchese of GoldSeek and SilverSeek.
After hitting an all-time high last summer, the gold price spent this year’s warm months in the doldrums, leaving some investors disappointed about its performance.
Chris Marchese, chief mining analyst at GoldSeek and SilverSeek, told the Investing News Network that the yellow metal’s price activity this past year hasn’t bothered him.
“I’m actually pretty happy with the gold price,” he said. “Obviously I’d like it to be higher, but we have to remember that the biggest pullbacks are during bull markets.”
What Marchese is more disappointed in is the performance of mining stocks.
“They are grossly undervalued right now — it’s incredible relative to their cash flow potential or cash flow generation,” he said. “Then you compare that to the mainstream equities and there’s just a disconnect in orders of magnitude; mining stocks could double and still be trading so far below mainstream equities.”
When asked what the problem is, Marchese said market participants are seeing risk-free returns in mainstream equities, which continue to climb higher and higher. With the potential for those types of gains on the table, investors have little desire to look for value.
“I honestly don’t know if the gold stocks will get a full appropriate valuation until there’s a stock market crash that doesn’t rebound like we saw in March 2020,” he said.
Overall Marchese has a positive outlook on gold, which he thinks could have a good close to the year. He’s also bullish on silver, but cautioned that it will take time for the white metal to make moves.
“You want to see (US$30 per ounce) ideally on a monthly and maybe a quarterly close on good, strong sustained volume — not just we intraday hit US$30.10 and then come back down, it can’t be like that. It needs to at least close the week, month and quarter above US$30, and once that happens I think all systems are go for US$50 to US$60 silver.”
Watch the interview above for more from Marchese on gold and silver.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.