[EDITOR'S NOTE: SOME SWEARING IN VIDEO]
(Kitco News) - Precious metals are not slowing down, said Lawrence Lepard, founder of Equity Management Associates.
On Thursday Lepard spoke to Kitco Mining.
Lepard is a long-time gold bull. He is surprised by the pace and strength of the gold price breakout, which he attributes to various macroeconomic factors, including increased demand from Asia and central banks. Lepard argues that gold’s bullish trend is real, driven by a combination of factors such as U.S. fiscal irresponsibility, rising deficits, and expectations of monetary debasement. He highlights the growing awareness among global investors that the U.S. is "fiscally trapped," leading to continued inflation and a weakening U.S. dollar, which he believes will further bolster gold prices in the years to come.
"I think people who [believe] the gold price will be $2,050 or $2,100 in four or five years...are delusional," said Lepard.
Despite gold’s rise, mining stocks have not kept pace, reflecting skepticism about the sustainability of the price increases. Lepard believes there will be a rotation into the miners when the rest of the stock market stops working.
"The very best gold stock bull markets take place when the other markets aren't working," he said. "[The] stock market is not obviously sick yet. I think it's in the process of getting sick and I think it could be very sick in a year or two as the economy slows down, but that hasn't really entirely happened yet."
Lepard is a big silver believer. Metal demand is from both monetary and industrial uses.
"That's going to increase the demand for silver," he said. "If you look at silver on a technical basis, you can see this enormous cup with a handle and we're right on the cusp of breaking out."
Lepard believes silver will "blow through" $50 ounce and head to $75 or $100 in next few years, and with miners all-in sustaining cost in the $12 to $22 range, the margins will be substantial.
"Do the math at $70 ounce. I mean it gets just crazy," said Lepard. "And some of [the silver miners] are selling at modest multiples of today's earnings. You're going to have a large number of silver companies that do 10 baggers or more. I'm incredibly bullish on silver and we've got, we are overweight silver in the portfolio."
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