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Equities have divorced from the gold price - SCP Resource's Peter Grosskopf

Kitco Media
By Michael McCrae
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(Kitco News) - Gold can be best understood as a 'reverse thermometer' for investors' confidence, said Peter Grosskopf, CEO of SCP Resource Finance.

Kitco Mining spoke to Grosskopf in mid-July at the Rule Symposium Natural Resource Investing 2023 show in Boca Raton, Florida.

Grosskopf, who was previously at Sprott, moved to SCP, which has a broker-deal focus. Grosskopf said there has been a decline in financing options for junior resource companies, and financial service firms have exited the sector.

"That's not really the right way to handle it," said Grosskopf. "You need to be there in the dark days as well."

The gold sector has been performing poorly in 2023 compared to the rest of the market. As of August 1, 2023, the VanEck Gold Miners ETF is mostly flat while the S&P is up 18% and the NASDAQ is up 40%. Investors are mostly confident, said Grosskopf. Investors believe that the Federal Reserve will successfully engineer a soft landing.

"People don't feel compelled to own gold right now," said Grosskopf.

He said when markets become unsettled again, gold will see an upswing. Tailwinds for precious metals are government debt levels and purchasing power declines due to inflation.

"Gold is kind of a reverse thermometer for people's confidence," noted Grosskopf. "The gold price itself is actually quite healthy and probably due for a rebound. I think it moves through its old highs anytime in the next year."

He said the prices of juniors have plummeted.

"The equities have divorced quite noticeably from the gold price and with the pullback that we've
seen especially in the juniors...they're trading a deeply discounted value, so I do think a good time to enter is now."

Kitco Mining’s coverage of the Rule Symposium Natural Resource Investing 2023 was sponsored by G Mining Ventures.

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Michael McCrae

Michael McCrae is leading Kitco's coverage of the mining sector. McCrae, who has both an MBA and CMA, knows how to build digital media properties. He was co-founder and publisher of MINING.com, an award-winning news site. Before coming to media, McCrae worked in IT and banking. Please reach out: mmccrae@kitco.com or (514) 670-1383. You can also follow him at @michaelmccrae.

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