Expert Panelists Agree — “Gold is Absolutely on Sale Now”
Panelists at the New Orleans Investment Conference offered insight on the gold market and the current buying opportunity.
At this year’s New Orleans Investment Conference, gold stood out as a popular topic among presenters and participants.
The yellow metal's performance amid so many perceived catalysts and where it may go in the months ahead were both discussed throughout the five day event, but these questions took center stage at the annual precious metals panel.
Currency, insurance, reality — describing gold in one word
Moderated by Thom Calandra of the Calandra Report, the 45 minute talk began with each panelist describing gold in one word.
“Currency,” said Omar Ayales, chief trading strategist at GOLD CHARTS R US. “Gold has been the de facto reserve currency of the world for thousands of years.” For Ayales, gold’s function as a currency is tied into its ability to store wealth and value.
“But right now it sucks, like somebody said, and that's because there are other currencies in the world right now … the US dollar has been very strong, so I think that is keeping gold artificially low," he added.
Gold has been moving down since early March, when it surged to a 19 month high of US$2,058 per ounce before retreating below US$1,900 a few days later. Meanwhile, the US dollar index climbed to a 20 year high of 114.16 at the end of September.
While the asset metal may be down in US dollar terms, Calandra explained that gold is doing quite well elsewhere — in fact, it's at or near all-time highs in many other currencies — "some of these currencies are down 35 percent (to the US dollar)," he said.
For panelist Dana Samuelson, founder of American Gold Exchange (AGE), gold represents “insurance.”
“It’s an insurance policy against financial uncertainty, (and) it’s a hedge against inflation in the traditional sense, where dollars just get their value by printing,” Samuelson pointed out to the audience. “And it's an insurance policy because once you buy it, you don’t have to keep paying a premium for it.”
Similarly, Rich Checkan gave a nod to gold’s resilience and stability with his selection of the word “workman-like.”
The president and CEO at Asset Strategies International (ASI) said his clients have been asking him for the last 18 months, “Why isn’t gold doing its job?’” To that, Checkan responds, “Gold has been doing its job in a workman-like fashion for that entire period.”
He went on to reference the Producer Price Index, which was at 8.5 percent in September, along with the 8.2 percent uptick in the Consumer Price Index over the last 12 months. “These are products and services that people consume most heavily, those headline inflation numbers are consumables,” the head of ASI said. “The deflationary side is what the (US Federal Reserve) is doing to pull the punch away from the party, and you see all the assets coming down.”
Checkan explained further, “(As the) asset bubble deflates, Bitcoin has come down 56 percent, the Dow Jones Industrial Average (INDEXDJX:.DJI) is down 20 percent, the S&P 500 (INDEXSP:.INX) is down 24 percent, the NASDAQ Composite's (INDEXNASDAQ:.IXIC) down 33 percent. Gold is down 8.7 percent against an 18.1 percent increase in the dollar this year. Gold is doing its job.”
Lobo Tiggre, editor and founder of IndependentSpeculator.com, rounded out the group of panelists and chose “reality” as his word for gold. He explained that for many, gold is a “financial abstract.”
He went on to recall the surprise he has seen on the faces of those feeling the weight of an ounce of gold for the first time.
“Most people, the first time (they hold an ounce of gold) their eyes get wider — suddenly they get it. This is real. This is a thing that exists in the world and has many uses,” Tiggre said.
Gold is on sale and will be for awhile
Moving the panel along, Calandra then posited that a loss of risk capital in the biomedical and mining sectors has disproportionately impacted some stocks in those spaces.
“Stocks are stocks,” Tiggre answered. “We've seen this before. We have a major rout in equities that's going to affect things that it shouldn’t affect, including gold stocks and uranium stocks.”
He continued, “By the way, uranium is up over gold this year, and uranium stocks still get whacked when the market goes down.”
Volatility can be stressful when watching a portfolio. However, as Tiggre explained, for the savvy there is opportunity.
“Price and value are not the same thing,” he said, quoting Doug Casey of Casey Research, who is well known as a resource sector speculator. “And when they converge, there is an opportunity to speculate. So once a stock sells off for the wrong reason, you have to have the contrarian courage to act on that because it is the golden opportunity.”
Picking up on this point, Checkan added that commodities have also been selling off for the wrong reasons.
“I think the depressed price in gold right now is an example of that,” he said. “Gold will always increase in value, as long as we're measuring in mismanaged fiat currency.”
For Samuelson, gold’s current US$1,600 level is a signal. “Gold is on sale right now in the US,” the founder of AGE told conference-goers. “That's important for all of you to know … and it's going to stay on sale for a few more months.”
He expects the liquidation period to end when the Fed is forced to move away from its tough interest rate hiking regime. “As soon as they start to ease off, we're going to see the dollar come down with it and we're going to see gold catch up.”
This idea was echoed by ASI's Checkan. “In the long term, (gold) is holding its value in terms of the goods and services it buys,” he said. “And it is absolutely on sale right now.”
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Securities Disclosure: I, Georgia Williams, 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.
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