Doug Groh: Gold Has Had a Big Move, Now it Needs to Stabilize

Interview by Charlotte McLeod; article text by Scott Tibballs.

A higher gold price has translated into a vastly changed landscape in terms of sentiment, according to Doug Groh, portfolio manager at Tocqueville Asset Management.

Speaking with the Investing News Network, Groh said that with a higher gold price, smaller-cap companies are looking at new opportunities — a big change from the same time last year.

“There’s a lot of different conversations going on which are really quite exciting, which wasn’t the case a year ago,” he said.

He also talked about where the gold price could be headed next, noting that a correction in value could be good to shake weaker players out of the market, and give those that feel they missed the opportunity to invest the chance to get back in.

“I think that with that you’d also see a broader interest in the precious metal equities, as well as investors (taking) advantage of lower precious metal prices,” he said.

On price predictions, Groh said that the precious metals industry is in a new environment entirely in 2019. “I think we would benefit to see the price range between US$1,475 (per ounce) and US$1,550 for a period of time before we go up to higher levels.”

He added that he thinks the gold price will average between US$1,350 and US$1,400 for the year, with a target of US$1,500 next year.

For trends, Groh implied that the divestment trend hasn’t quite played out after the last year of mergers.

“But I think as those two large mergers have come together and those companies look at their portfolios, they’re trying to figure out which assets to sell. Meanwhile we have a better gold price environment, we have a junior and mid-cap market I think recognizing that maybe those properties that would have been for sale from Barrick Gold (TSX:ABX,NYSE:GOLD) and Newmont Goldcorp (TSX:NGT,NYSE:NEM) don’t necessarily fit the profile that a mid-cap company might benefit from.”

Listen to the full interview above for more thoughts from Groh on the gold space and the mining industry in general. Our full playlist for the Precious Metals Summit can be found on YouTube.

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Securities Disclosure: I, Scott Tibballs, 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.