To understand where precious metals are going you also need to understand energy, said Steve St. Angelo of the SRSrocco Report.
Prices for gold and silver have seen major increases this year, and interest in these precious metals is rising in tandem as both new and experienced investors rush to the space.
But higher prices aren’t the only reason market watchers should pay attention to gold and silver. According to Steve St. Angelo, independent researcher at the SRSrocco Report, there’s much more to the story, including a key aspects that many investors miss: energy.
“What’s happened in this complex world we live in with a lot of technology and a lot of levels of the supply chain — we just forget about the energy. We take it for granted,” he explained.
“That’s fine when the energy supply and the energy return on investment is positive and is in a good position,” St. Angelo continued in a conversation with the Investing News Network. “But when there’s problems with it, then the entire system is in trouble. And we are now in trouble.”
Stocks, bonds and real estate are where most people have the bulk of their investments, explained St. Angelo, and their performance is based on oil production growth.
“As we start to get in trouble with oil … you’re going to start seeing a decline in the value of stocks, bonds and real estate, and to protect their wealth more and more investors — as you’re starting to see now — are going to move into the precious metals,” he said.
St. Angelo has a positive outlook for gold and silver for that reason. “I anticipate much higher values for gold and silver because they are what I call stores of energy equivalent value,” he said.
“(In contrast), stocks, bonds and real estate are energy IOUs. All I’m saying is you have to continue burning more energy in the future to give those stocks, bonds and real estate value. Gold and silver … the energy was burned in the past. That’s the big difference that investors don’t get.”
When asked about how to get exposure to precious metals, St. Angelo said physical is the place to start, although those who are good at trading may want to get into gold and silver exchange-traded funds.
He also pointed to gold and silver stocks, saying that he thinks they will “do much better than people realize, especially silver.” However, he emphasized that those without a lot of funds to invest should avoid stocks since they tend to be on the riskier side.
Watch the interview above for more from St. Angelo on the relationship between precious metals and energy, falling ore grades for gold and silver and more.
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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.