Peter Grandich: We Need this Washout for Gold to Go Higher

TL;DR

Gold has experienced recent headwinds but is expected to recover in 2021 due to the basing of currencies, low interest rates, and inflation concerns. Uranium, which has been suffering for the past decade, is showing signs of a turnaround with declining supply and growing demand from utilities.

Transcript

i'm charlotte macleod with the investing news network and here today with me is peter grandage of peter greenwich and company thank you so much for being here online with me today nice to be with you yes it's nice to be talking with you and i think where we're going to start is with gold it's been a difficult couple of weeks for gold although overa... Read More

Key Insights

• 😘 Gold has recently experienced a correction after a parabolic rise but is expected to recover in 2021 as currency basing, low interest rates, quantitative easing, and inflation concerns drive demand for the metal.
• 🏅 The COVID-19 pandemic may have accelerated existing trends in the gold market, but it was not the primary driver of its price movement.
• 🏅 The gold market has evolved, and investors need to adapt to changing dynamics, especially in the junior resource market, mid-tier producers, and emerging gold rush areas like Quebec.
• 💗 Uranium has suffered for the past decade but is showing signs of a turnaround due to declining supply and growing demand from utilities. The sector may see significant gains in 2022.

Questions & Answers

Q: What factors have contributed to the recent correction in the gold price?

The parabolic rise in gold earlier this year was followed by a correction, which can be attributed to rampant speculation in financial assets, the growing popularity of Bitcoin, and profit-taking in the stock market. These factors overshadowed the bullish sentiment of a few months ago and led to lower price predictions.

Q: What are the main drivers of gold in the current market?

The primary drivers of gold are the basing of currencies worldwide, low interest rates, ongoing quantitative easing measures, and concerns about future inflation. The lack of a standout currency among the major economies and the potential for increased inflation make gold a natural alternative to paper money.

Q: Has COVID-19 been the main catalyst for the rise in gold prices?

While COVID-19 has certainly had an impact on the gold market, it is not the sole reason for its rise. Gold had already been rising before the pandemic due to currency basing and low interest rates. COVID-19 may have accelerated existing trends, but it was not the fundamental driver of gold's price movement.

Q: How does the current gold market compare to previous market conditions?

The markets, in general, have changed dramatically over the years, including the gold market. However, certain aspects of the gold market, such as its relationship with paper money and the influence of the paper market, remain relatively consistent. It is crucial to adapt to the changing market dynamics to make informed investment decisions.

Q: Have you changed your position on gold and mining stocks given the recent price activity?

In 2018, I became bullish on gold and mining stocks, which proved to be a profitable decision. I took profits when gold approached $2,000 per ounce earlier this year but re-entered the market when it dipped to around $1,850. I believe gold is a safer and better bet than general equity, especially considering the current economic climate.

Q: Which segments of the gold mining industry offer the most potential for gains?

While the junior resource market has the highest potential for significant gains, it also carries the most risk. Mergers and acquisitions are likely to increase in the mid-tier producer segment as larger companies seek to add to their reserves. However, the greatest opportunity may lie in the burgeoning gold rush in Quebec, where several emerging companies are positioned for success.

Q: Are there any trends in the gold market that investors might be overlooking?

It is essential to recognize that mainstream financial news services often treat gold unfavorably. Wall Street tends to view gold as kryptonite, which can influence the sentiment surrounding the metal. Additionally, investment demand has become a crucial factor in gold price movements, surpassing jewelry demand. Monitoring investor sentiment and physical gold purchases can provide valuable insights.

Q: What interests you in the uranium market, and is there a turnaround on the horizon?

I became interested in the uranium market after realizing its potential for a turnaround. With declining supply and steady or increasing demand, utilities will need to secure future supplies, especially as nuclear power gains renewed interest as part of the green movement. I believe the turnaround is in its early stages, and utilities will come to the table in a significant way in 2022.

Summary & Key Takeaways

• Gold has seen a correction after a parabolic rise earlier this year, influenced by speculation in financial assets and the growing popularity of Bitcoin. However, the bullish sentiment that drove predictions of $3,000-$5,000 per ounce is being washed out, paving the way for a potential recovery in 2021.

• The main drivers of gold are the basing of currencies worldwide, low interest rates, ongoing quantitative easing measures, and concerns about future inflation. These factors make gold an attractive alternative to paper money.

• Uranium has been in a slump for the past decade but is now showing signs of a turnaround. With declining supply and the potential for increased demand from utilities, the sector may see significant gains in 2022.