"I think (gold) should be almost US$1,000 higher," said Frank Holmes of US Global Investors.
Frank Holmes January 2022 V2 youtu.be
Gold didn't perform as well as some market participants hoped it would in 2021, but according to Frank Holmes, it's important to keep the larger picture in mind.
Speaking to the Investing News Network, the CEO and chief investment officer of US Global Investors (NASDAQ:GROW) said last year the average price for gold was actually marginally higher than it was in 2020.
In his opinion, the issue is that the dialogue around gold is centered heavily on daily price movements.
"This century gold has outperformed 86 percent of the time. That's a real shocker. It's outperformed the S&P 500 (INDEXSP:.INX) by 225 percent this century. So not having a weighting in gold is flawed thinking," he said. "Gold is one of those great unique assets, but it's so caught up by just the daily price defining its existence."
When asked what a fair price for gold would be, Holmes said the yellow metal definitely isn't at the right level given factors like negative real interest rates and the huge amount of money printing from G7 nations. "I think it should be almost US$1,000 higher," he said. Gold was around US$1,800 per ounce at the time of the conversation.
Holmes also offered two pieces of advice to gold company CEOs.
"If they have free cashflow, they have to explain better that they have this free cashflow and compare themselves to the overall market — (show) that they're a better financial risk-adjusted return," he said. "And two, if they have free cashflow, they should take 10 to 20 percent of that free cashflow and HODL gold."
HODL stands for “hold on for dear life,” and is a term that originated in the cryptocurrency community, although it’s since gained mainstream usage through popular memes. Holmes has spoken about this strategy before, and emphasized that it could be a way to get younger investors more interested in gold.
Watch the interview above for more from Holmes on gold, as well as bitcoin and Ethereum.
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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.