(Kitco News) - As gold continues to hover above $3,350 and silver surges past $34 for the first time since 2012, renowned asset manager Adrian Day warns that markets are mispricing miners and overlooking a looming liquidity crisis that could force the Federal Reserve to resume quantitative easing (QE) as early as September.
Speaking with Kitco News at the Mining Event of the North in Quebec City, Day said, “It’s difficult to think of a scenario that’s fundamentally gold-negative.” He described central banks buying gold, Chinese investors hedging yuan devaluation, and rising fiscal concerns as the main drivers going forward.
The OECD this week slashed global growth forecasts, citing U.S. tariffs under President Donald Trump for disrupting trade and dragging GDP down to 1.6%. That contributed to a sharp dollar decline and a third consecutive weekly gain for gold.
Day believes the U.S. Treasury will run out of money by the end of summer, forcing the Fed to step in. “I think QE is much more likely than dramatic rate cuts. The concern is no longer jobs, it’s funding the government,” he said.
Despite gold’s strength, mining equities remain severely undervalued, Day argued. “Agnico is trading in the lowest 20th percentile of its 40-year price-to-cash-flow range, [even with record margins],” he said. “ Barrick is trading in its lowest decile of price to NAV in its entire history.”
Day expects increased M&A activity among mid-tier producers and sees royalty companies like Franco-Nevada and Wheaton Precious Metals as strong portfolio foundations. He also remains bullish on uranium and copper, noting long-term supply constraints.
“I would definitely hold gold mining stocks through next year … and uranium as well,” Day concluded. “This is just getting going.”
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