VIDEO — David Erfle: Why the Gold Price Bounced, What Could be Next

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After six months of price declines, David Erfle of Junior Miner Junky believes the gold market is getting exciting again.

Speaking about the yellow metal's recent fall to the US$1,622 per ounce level, he called it a "false breakdown" and said it was significant to see gold not only get back above the US$1,675 level, but also continue higher.

"That's what happens with the gold sector — it does this every single time there's a major bottom," Erfle said. "You have a false move first to get everybody out of the boat, and then when most everybody's out that's when it reverses."

In terms of what's next for the precious metal, Erfle has a number of signals he'll be watching for.

One is a move above US$52 per share for major miner Newmont (TSX:NGT,NYSE:NEM), which he believes will bring generalist investors back into the sector. Erfle is also looking for gold to break US$1,800, which he thinks will spark interest in the juniors.

When asked if he thinks those events will happen in 2022, Erfle said it's possible, but too soon to say.

"It's really going to be interesting how the gold price reacts now, because the dollar's coming off after going up (in such a) parabolic move," he said. "I don't think that the rise in the US dollar is over, I think it's just correcting. What I believe is going to happen is when the US dollar starts to rise again, I think gold will go up with it as a crisis hedge."

Erfle said earlier this year that he was focusing on later-stage junior developers that are at the feasibility stage, or at or close to the financing phase. He still sees potential in these types of companies, and noted that valuations for some "have become really attractive." However, with US elections still to come he is also maintaining a large cash position.

Watch the interview above for more from Erfle on the gold market.

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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.