“If You Are Bullish Gold, Buy Silver” – Vince Lanci | INVEST LIKE THE EXPERTS
Friday December 18, 2015 11:32
(Kitco News) - Invest LikeThe Experts (#InvestLike) is back!
A coveted part of Kitco News’ annual outlook series and a fan favorite, the #InvestLike series brings together veteran investors to find out where they will be placing their bets in the coming year.
This year, Kitco News gave its experts $100,000 to invest. We also asked them what they think will affect gold prices the most next year and what their New Year’s investment resolution will be.
Kitco News will be running this feature every Friday for the next few weeks. A new expert will be unveiled every week so be sure to come back to find out where some of the best investment gurus are putting their money in 2016.
PART II: RBC's George Gero Gives His Investment Ideas For 2016
PART III: Rickards: Fed, USD, Inflation To Have Biggest Impact On Gold In '16
PART IV: Schiff Shifts More Weight On Gold For 2016 – Invest Like Experts Series
PART V: How Would Brent Cook Invest $100k in ’16? – Invest Like Experts, Mining Edition
Expert: Vince Lanci
Vince Lanci, Echobay Partners
Claim To Fame: With $5 million, he generated $80 million in profits in natural gas for Platinum Partners in 2007.
How would you invest $100,000 in 2016?
“I don't recommend these without a full analysis of risks to anyone. Execution and selection are key,” warned Vince Lanci, adding that the following breakdown is how he’d broadly allocate his 1-year speculative portfolio in 2016.
“It will increase this year as a function of policy confusion. Buy options not VIX baskets. Bonds, stocks, precious metals, oil, grains,” he said. “Yellen's recent statements said as much: QE is done but easy money isn't.”
“Aramco will try to destroy shale with the US's blessing, like it did the rogue OPEC nations in 1999. Start covering near $20,” Lanci continued, noting that the only issue that could arise is if tensions with ISIS heighten in the region, particularly in Saudi Arabia.
According to Lanci, you can allocate 15% by investing in “futures, or buying oil firms who will enjoy better profit margins from lower prices.”
“If you are bullish gold, buy silver,” he said. Lanci added that precious metals financing has dried up and as base metals mining slows, silver as a byproduct will shrink.
“If futures curve goes into backwardation, it will be too late. As a paired trade, sell silver stocks with poor cash flow or just short a base metal,” he suggested.
It is important to hold some cash so that it is, “ready for quick use after election is digested and markets settle after Q1,” he said.
“If rates rise, CME earnings will benefit as businesses return to hedging interest rate risk,” he said.
According to Lanci, it is important to allocate resources in NASDAQ as the index looks to “increases its energy market footprint.”
What factor will affect gold the most in 2016?
There are many factors that will sway gold prices next year, but Lanci said the two predominant ones will be monetary policy (80%) and geopolitics (20%).
“Markets are at a reflex point and the Fed must stop deflation by keeping real rates low,” he said. “It has done all it can, but cannot yet convince the millions of under-saved boomers to spend money. It has no control over the velocity of money, which is tied to public fears. The Fed has reached its level of ineffectiveness.”
“No matter what happens the Fed must keep real rates negative to keep the baby-boomer fantasy going. They will risk hyperinflation before a deflationary depression. Millennials will be left holding the bag,” he added.
Regarding geopolitics, Lanci said “central banks are not cooperating again, which could be a big issue for Fed wish fulfillment.”
“Welcome to the Anti-Goldilocks Era!”
What is your New Year’s investment resolution for 2016?
“Stay away from the herd. Good trades get crowded too fast and exit liquidity is a fantasy. Think for myself more,” Lanci said.