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Seasonal factors to add fuel to gold's rally - Mickey Fulp

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(Kitco News) - The gold market continues to see a significant recovery in December as it reclaims lost ground, and one mining investor and newsletter writer said that gold 's rally will only strengthen due to positive season factors.

In a recent telephone interview with Kitco News, Mickey Fulp, founder of the Mercenary Geologist newsletter, said that he is looking to jump into the precious metals market in mid-December, just ahead of the Federal Reserve's final monetary policy meeting of 2020.

Fulp added that gold has a strong seasonal pattern of rallying from mid-December through the first quarter of the year. He added that continued stimulus from central banks and more government spending would remain strong fundamentals for gold through the early part of 2021.

"I'm not buying right now, but I know people who started buying a couple of weeks ago," he said. "We could still see a season-low in gold , so the time for me to buy is mid-December. With the path that we are on right now, there is no doubt that more stimulus is coming. We're past due for a sustainable run in commodities."

The comments come as gold prices trade near a two-week high. February gold futures last traded at $1,869.30 an ounce, up 1.6% on the day. Meanwhile, silver also continues its rally. March silver futures last traded at $24.85 an ounce up nearly 2.5% on the day.

With gold and silver prices expected to resume their uptrend after a nearly four-month-long consolidation period, Fulp said that he continues to see value in the mining sector.

While Fulp is known for investing in junior explores, he also sees investment potential among senior producers. Although the third quarter could represent a peak in margins for mining companies, a stable gold price around $2,000 with low input costs still means these companies are profitable.

"Holding producers is not a long-term hold for me. I'm looking at buying a sector that hasn't moved up with the gold price. The fundamentals continue to look strong for the mining sector," he said.

Fulp added that he sees overall value across the mining sector. Adding to his bullish outlook for junior explorers is the fact that copper prices are trading near an eight-year high.

As much as the gold mining sector has suffered from a lack of exploration, analysts have noted that the copper market is in a lot worse shape. Fulp said that with copper prices in a significant bull market, copper-gold exploration project look extremely attractive.

"These higher copper prices are very bullish for the gold market. The largest gold deposit is actually a copper mine," he said. 

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.