(Kitco News) - History is a good predictor of what happens to gold and gold stocks when interest rates fall, said Jeff Clark, founder of TheGoldAdvisor.com.
In mid-January Clark spoke to Kitco Mining at the Vancouver Resource Investment Conference 2024.
Clark said he looked back at 11 monetary easing periods since the 1970s, and in nine of those periods the gold price rose.
He also referenced John Hathaway, co-portfolio manager of the Sprott Gold Equity Fund, who recently put out a report showing that gold stocks as a group rose up to 400 percent during the last three rounds of Fed easing. “That is our-short-term catalyst for gold,” Clark said.
Clark believes gold needs to have “a sustainable breakthrough” to all-time highs for there to be upward movement in gold equity prices.
“Whatever the reason might be, once that happens, I think that ushers in the beginning of a shift in sentiment in the junior mining sector,” he said, adding that “when the mainstream investors come back, given how far sold off we are, the returns could be quite spectacular.”
In deciding which gold companies to invest in, Clark said he pays most attention to “the two C’s” — cash and catalysts.
“If a company doesn't have cash, if they're not able to raise for any reason, they don't have a significant amount of cash to advance their projects, those are ones that are going to continue to struggle,” he said. “And then of course they have to have catalysts, they have to have projects that they can actually advance, that can be improved in a materially or meaningful way.”
Regarding future consolidation in the gold space, Clark said he thinks it’s happening “behind the scenes,” pointing out Barrick Gold’s (TSX:ABX) CAD$23.4 million investment in Hercules Silver (TSXV:BIG), and Calibre Mining’s (TSX:CXB) acquisition of Marathon Gold (TSX:MOZ), where there were 20 counterparties. “That shows you there’s a lot of interest,” he said.
Coverage of the Vancouver Resource Investment Conference 2024 was sponsored by Snowline Gold.