Maria Smirnova: 3 Catalysts for Gold, Plus the Case for Silver

TL;DR

Gold and silver have had a strong year, driven by the COVID-19 pandemic, government stimulus, low interest rates, and negative real interest rates. While there has been a recent pullback, the long-term potential for gold remains positive.

Transcript

i'm charlotte macleod with the investing news network and here today with me is maria smirnova senior portfolio manager at sprott asset management and sub advisor nine-point partners thank you so much for being here today maria thank you for inviting me to be here so let's get started with our questions we're gonna be starting off with gold overall... Read More

Key Insights

• ☠️ Gold's breakout year has been driven by various factors, including the COVID-19 pandemic, government stimulus, low interest rates, and negative real interest rates.
• ☠️ The recent pullback in gold and silver prices can be attributed to the strengthening US dollar, increasing real interest rates, uncertainties surrounding the US election, and concerns about a second COVID-19 wave.
• 🎴 Projections suggest a positive long-term potential for gold, with the possibility of reaching $3,000 per ounce. Factors like low or negative real interest rates, fiscal and monetary policies, and geopolitical tensions play crucial roles.
• ✋ Silver has outperformed gold in 2020, benefiting from investment flows and industrial demand. Its volatility is higher due to its smaller market size.
• 🤘 Investors can choose from options like physical metals, stocks, and ETFs to gain exposure to gold and silver. Bullion is less volatile, while ETFs provide convenient access without physical storage requirements.
• 💦 The mining industry has worked on balance sheet improvements, and opportunities can be found in small to mid-cap companies that focus on exploring and finding new deposits.
• 👾 Generalist investors are showing interest in the precious metals space, but it is yet to be seen how significant their inflows will be and how they might impact valuations.

Questions & Answers

Q: What were the main drivers behind gold's strong performance this year?

The main drivers were the COVID-19 pandemic, government stimulus packages, and central banks' monetary liquidity measures. These factors increased liquidity and debased fiat currencies, highlighting gold as a safe-haven asset.

Q: Why did gold and silver prices experience a recent pullback?

Factors contributing to the pullback include the strengthening US dollar, increasing real interest rates, concerns about a second COVID-19 wave, volatility related to the upcoming US election, and the absence of a new stimulus package.

Q: What is the long-term potential for gold?

While no specific price predictions are made, experts suggest that gold has room for growth, with some projecting prices to reach $3,000 per ounce. Factors such as persistent low or negative real interest rates, fiscal and monetary policies, and geopolitical tensions can drive gold's long-term potential.

Q: How has silver performed compared to gold in 2020?

Silver has outperformed gold, with a 30% increase year-to-date. It has a strong relationship with gold but is more volatile due to its smaller market size. Silver benefits from both investment flows and industrial demand, which is expected to increase as the world recovers from the pandemic.

Q: What are the best ways for investors to gain exposure to gold and silver?

Investors can consider options like physical metals, stocks, and ETFs. Bullion is less volatile than stocks, while ETFs provide exposure without the need for physical storage. Nine Point Partners offers various products for investors interested in gold and silver.

Summary & Key Takeaways

• Gold has had a breakout year, with a 24% increase year-to-date, driven by the COVID-19 pandemic, government stimulus, and negative real interest rates.

• The recent pullback in gold and silver prices can be attributed to the strengthening US dollar, increasing real interest rates, and uncertainties surrounding the US election and global economic recovery.

• The long-term potential for gold is positive, with projections suggesting a potential for prices to reach $3,000 per ounce. Factors that could drive gold's growth include persistent low or negative real interest rates, fiscal and monetary policies, and geopolitical tensions.

• Silver has outperformed gold, with a 30% increase year-to-date, benefiting from investment flows, industrial demand, and its relationship with gold.

• Investors can gain exposure to gold and silver through various options, including physical metals, stocks, and ETFs. Bullion is less volatile than stocks, while equities have strongly outperformed bullion this year.