Factors like bitcoin enthusiasm, US dollar strength and higher rates are holding gold back right now, said Ian Ball of Abitibi Royalties.
Gold has trended down so far in 2021, but Ian Ball, president and CEO of Abitibi Royalties (TSXV:RZZ,OTC-Nasdaq Intl:ATBYF), sees better days ahead for the yellow metal.
He said the last couple of months have been trying for gold investors, but reminded market participants that the yellow metal still has underlying support from a variety of important factors.
In his mind, money supply is at the top of the list. Notably, 20 percent of all US dollars in existence were created last year, which should be a tailwind for gold.
So why isn’t the precious metal performing better at the moment? “I wish I had a better answer for you, but I don’t. I think gold should be trading higher,” Ball said.
“If you look at the US deficit that they’ve been running, if you look at the money supply that’s been created versus the amount of new gold that’s been produced over the past year, you can make a strong argument that gold should be trading somewhere between US$1,900 and US$2,400 an ounce.”
Factors like bitcoin enthusiasm, US dollar strength and higher rates are holding gold back right now, but Ball sees US$1,600 to US$1,700 as a floor and is confident gold can’t be held back in the long term. “I suspect in a year’s time we’ll be higher than where we are today,” he said.
Aside from the gold price, Ball spoke about the recent influx of new entrants to the royalty and streaming space, saying that Abitibi’s goal is to differentiate itself through its organic growth strategy and its commitment to maintaining a low share count.
He also touched on generalist investors, saying that although there’s been talk of these people becoming interested in gold, the industry will have to make a concerted effort if it really wants to attract this group.
“I think when we look at how to attract a generalist investor, I think we have to remember we’re competing against bank stocks in Canada that pay big dividends … we’re going up against tech stocks. And so we have to show why we can get a higher return on capital than other industries. I think that’s what it comes down to,” he explained to the Investing News Network.
Watch the interview above for more from Ball on Abitibi Royalties and what’s happening with gold.
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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.