“I think the catalyst we’re actually waiting for is for the more conventional financial assets to perform less well,” said Sean Fieler of Equinox Partners.
With the gold price back below US$1,800 per ounce, investors are wondering what it will take to break the yellow metal out of its slump and back in range of last year’s highs.
Sean Fieler, CIO and president of Equinox Partners, believes the stage seems to be set for gold to perform — the problem is that market participants continue to see success with traditional assets.
“I think the fly in the ointment so to speak has been just (that) everybody’s been doing so well owning the same assets they’ve owned for the last 10-plus years — 12 years now at this point since the lows in the stock market,” he explained to the Investing News Network in an interview.
“If the S&P 500’s (INDEXSP:.INX) going to go up 20 percent a year, why come and invest in a niche segment of the market? Maybe it makes sense intellectually, but I think it’s hard for people to actually pull the trigger,” Fieler continued. “So I think the catalyst we’re actually waiting for is for the more conventional financial assets to perform less well.”
It’s tough to know when that could happen, but Fieler said he’s starting to notice late-cycle phenomena.
“What we’re looking at today I think is to me most reminiscent of what we saw in the late ’90s in that you have some very conventional, very pedestrian business models that are getting really extraordinary valuations because they put some new wrinkle on very old technology or old business models,” he said.
Given the current backdrop, Fieler sees opportunity in gold and silver stocks, and noted that while Equinox Partners’ exposure is more on the junior side, large producers also look compelling at the moment. He pointed to Endeavour Mining (TSX:EDV,LSE:EDV,OTCQX:EDVMF) as an example, saying, “That’s a company today where you get a 15 percent sustainable free cash flow yield, 5 percent of which is coming back to you in dividends and share buybacks currently.”
Fieler ended by encouraging those who are still on the sidelines to consider the precious metals market. “If you’re not already invested in the space, it’s a great moment to take a hard look and kick the tires … really I think it could be your choice as to which part of the space you want to get involved in,” he said.
Watch the interview above for more from Fieler on the gold space.
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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.