Top Stories This Week: Gold Below US$1,800, Experts Say Long-term Drivers Intact

The gold price fell back below the US$1,800 per ounce mark this week, and was trading at about US$1,785 at the time of this writing on Friday (February 19) morning. 

As usual, market watchers have pointed to a variety of factors to explain the yellow metal’s fall — those include a stronger US dollar, higher US Treasury yields and a lack of interest in gold as an inflation hedge.

Paul de Sousa of Sightline Wealth Management believes investors shouldn’t be discouraged by a lower gold price — in his opinion, gold is a long-term play, and dips in the price should be taken as a buying opportunity. “Acquire it, (then) worry about everything else in (your) portfolio,” he told me.

“I’ll repeat myself here — just do not concern yourself with the price on this. It’s tangible wealth, it has a long, long history of money. Acquire it, (then) worry about everything else in (your) portfolio” — Paul de Sousa, Sightline Wealth Management

Also looking at the long-term picture for gold, Maria Smirnova of Sprott Asset Management said that for her the yellow metal still has three main big-picture drivers. Those are fiscal policy, monetary policy and geopolitical tensions. While geopolitical tensions have so far been less prominent this year for gold, fiscal and monetary policy have definitely been center stage.

Maria explained to me that with trillions of dollars of stimulus proposed, the fiscal policy outlook looks supportive for gold; meanwhile, in terms of monetary policy, the US Federal Reserve and European Central Bank remain dovish, which should also be good for precious metals like gold.

“If anything, the fiscal side of things has an improved outlook for gold and silver in the sense that if we have more proposals for trillions of dollars of stimulus, that only should be good for the metals” — Maria Smirnova, Sprott Asset Management

It’s worth noting that the Fed released the minutes for its latest meeting this week, reiterating that it plans to keep interest rates near zero until inflation and employment levels rise. The central bank’s statement indicates that economic conditions are still “far” from where it would like them to be.

“All members agreed to maintain the target range for the federal funds rate at 0 to 1/4 percent, and they expected that it would be appropriate to maintain this target range until labor market conditions had reached levels consistent with the Committee’s assessments of maximum employment and inflation had risen to 2 percent and was on track to moderately exceed 2 percent for some time” — US Federal Reserve

We asked our Twitter followers last week where they think the silver price will be at the end of Q1, and this week we thought it was only fair to ask the same question about gold. By the time the poll closed, most respondents said they see it being in the US$1,800 to US$1,900 range.

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.

Finally, in the cannabis space this week, INN’s Bryan Mc Govern spoke with Terry Booth. The former leader of Aurora Cannabis (TSX:ACB,NYSE:ACB) is about to take the helm at Australis Capital (CSE:AUSA,OTCQB:AUSAF), and he discussed where the company is headed.

Terry emphasized that he doesn’t want Australis to be Aurora 2.0 — instead, he would like to see Australis build cannabis cultivation facilities for other companies and potentially put deals in place to secure a percentage of the product these companies grow.

“We’re not building an Aurora 2.0 —  we’re not going to build a bunch of big facilities and then cultivate cannabis. But we are going to build big facilities for others and have them cultivate a certain amount of cannabis assigned to us” — Terry Booth, Australis Capital

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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.