David Skarica: Explosion in Gold Price on the Horizon
David feels the general markets and the way quantitative easing was structured are the reason gold has underperformed. This money instead went into financial markets, real estate, and art. Gold is a fear trade, and over the last few years, we have had mass complacency. If the Fed instead signals that tightening is ending along with rate hikes that could send gold higher. People are currently in a hope phase, hoping that prices will go higher in stocks. If there is another down leg in the markets, it will strengthen the case for a gold rally.
Right now you want junior exploration plays with ounces in the ground and those with an expanding resource. Also look for companies that are nearing production or increasing production as the gold price goes up. As prices rise certain undervalued companies with marginal profits have the potential to become spectacular. Companies that have good results in a lousy market often out-perform in the next market cycle.
Marijuana markets in Canada are complicated and bungled with few stores and a restrictive red-tape marketplace. The hype from legalization resulted in a sell-off, but there could be a rally coming back in a couple of years as these problems get solved.
There are signs that the US dollar is topping and that recent moves toward easing will send it into decline. We could be looking at something like the early 2000s where the dollar declines and resource stocks do quite well. There are a lot of problems with United States debt. American markets have outperformed because the credit bubble fueled the stock bubble which ultimately will put pressure on the dollar.
Time Stamp References:
1:30 – Outlook for gold and where the money is going.
2:30 – Gold is a fear trade, investors still complacent.
3:00 – Interest rates and quantitative tightening effects.
4:45 – Could QE come back?
6:00 – When gold could rally.
7:00 – Investors are still in the “hope” phase.
8:45 – Positioning yourself in this market – junior plays.
13:00 – Canadian Marijuana legalization outlook.
14:30 – Possible plays in this sector.
18:45 – US dollar outlook and debt risks.
Talking Points From This Week’s Episode
• Golds performance is often fear-driven.
• Fed policies are acting like hidden rate hikes.
• What to look for in junior miners.
• Why the US Dollar may be topping.
David Skarica is the founder and Editor of Addicted to Profits, a popular newsletter known for its stellar performance in both up and down markets. Skarica entered the financial markets at a very young age and, at the age of eighteen, became the youngest person on record to pass the Canadian Securities Course. He is a regular speaker at trade and investment conferences in Canada and is a guest on the Business News Network (BNN), Canada’s flagship business broadcasting network. His work has appeared in publications such as the Bull and Bear Financial Report, Barron’s, Investor’s Digest of Canada, and Canadian MoneySaver. Skarica also writes Gold Stock Adviser, an investment newsletter for the conservative media outlet, Newsmax. David’s newest book, Collapse, is available on amazon.com.