Top Stories This Week: Don’t Fear Gold’s Correction, Macro Factors Still Key

It was another week of downward momentum for gold, which tumbled about US$100, dropping from around US$1,880 to US$1,780. The yellow metal hasn’t been at this level since July, and market watchers are questioning how much lower it could go. 

In the face of this price activity, many experts are encouraging investors to focus on gold’s key long-term macro drivers and not its less important shorter-term influences.

Peter Grandich of Peter Grandich & Company told me he’s not surprised to see a correction in gold after its “near-parabolic rise earlier this year.” In fact, he believes that this price action is necessary — he noted that after months of much higher gold price predictions, he’s now seeing calls for lower levels.

“We had a near-parabolic rise earlier this year. It’s not uncommon to see a substantial correction not long after that. I think that’s what we’ve experienced” — Peter Grandich, Peter Grandich & Company

He emphasized that to get to the higher gold price levels that some people have predicted, this type of sentiment needs to be washed out of the market first.

I also heard this week from Rob McEwen of McEwen Mining (TSX:MUX,NYSE:MUX), someone who is of course very well known for one of those much higher gold price predictions.

He’s had a US$5,000 gold forecast for a long time, but said that at this point he believes the metal’s price could go north of that US$5,000 number.

“When you look at the response to fighting COVID, it’s not one country or a small group of countries, it’s global. The monetary expansion has been enormous. In addition, the debt loads are much greater. So I think the possibility of a much higher price than US$5,000 is very real” — Rob McEwen, McEwen Mining

In this environment, Rob believes junior exploration companies and turnaround stories have the most potential. In his opinion, McEwen Mining, which has had a difficult couple of years even beyond what’s going on with COVID-19, falls into the latter category.

With that theme in mind, we asked our Twitter followers this week where they’re putting most of their money right now if they’re investing in gold stocks — the choices were juniors, mid-tiers, majors or royalty and streaming companies.

By the time the poll closed, juniors were in the lead with nearly 60 percent of respondents choosing that answer. Mid-tiers got the least attention at 10 percent or so, while majors and royalty and streaming companies were even at about 15 percent each.

We’ll be asking another question on Twitter next week, so make sure to follow us @INN_Resource or follow me @Charlotte_McL to share your thoughts.

Once again we’ve got an update on the psychedelics space instead of cannabis. INN’s Bryan Mc Govern looked this week at what’s happening with the industry’s grassroots beginnings as it becomes more mainstream and as psychedelics companies enter the capital markets.

“I think the interesting thing about these substances is that beyond the obvious therapeutic and medical applications that we’re seeing, I think on a personal level they have this kind of tremendous capacity to (create) personal development and empathy” — Michael Hoyos, the Conscious Fund

Those who have a longer-term involvement in psychedelics research seem to hope the focus can remain on the potential therapeutic and medical benefits of these substances, even as they gain traction and as the desire for profit grows. And new participants appear eager to make that happen.

Time will tell if those aspirations come true as the sector develops further in 2021.

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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.