(Kitco News) - Gold has been caught in a broad trading range for the last two months, but one precious metals analysts said that a laundry list of fundamental factors supports the market.
In June, Jeff Clark, senior precious metals analyst at Goldsilver.com, recommended that investors be overweight in gold. Although market volatility has picked up, he said he hasn’t seen anything that has changed his bullish outlook in his latest interview with Kitco News.
“There are so many reasons to own gold. I mean, there are more catalysts for gold right now, than there are hairs on my head,” he said. “If you were the God of gold and you designed an environment that was conducive for gold, you couldn’t dream up any more of a perfect environment than what we have right now.”
Ongoing election turmoil and uncertainty, social unrest, fundamental concerns surrounding the U.S. dollar, the ongoing economic chaos caused by the COVID-19 pandemic, unprecedented amount of monetary and fiscal stimulus, with more expected to come, low to negative real interest rates, these are just some of the factors Clark said that will continue to drive precious metals prices.
“I am still buying gold. I’m still buying silver, especially on the pullbacks until someone can tell me that the whole list of those issues is resolved,” he said.
Although gold prices have fallen from August’s all-time highs, Clark said that with so much uncertainty in the world, it wouldn’t take a major catalyst to push gold prices back above $2,000.
“I would be very surprised if we’re not over $2,000 by the end of the year. But again, in the big picture, any dip in the price here is nothing but a buying opportunity for me,” he said.
With gold prices expected to push higher, Clark said there is still an opportunity to find value in gold mining stocks. He added that he expects companies will report extraordinary third-quarter earnings at the end of the month.
“In Q2, the average gold price was around $1,710. In Q3, the average gold price was over $1,900 an ounce…so there’s a $200 an ounce rise in the gold price between Q2 and Q3,” he said.
Not only are gold producers seeing prices rise, but their costs have remained relatively stable, which means margins could continue to increase, Clark said. He added that if margins continue to grow, there is still plenty of value for investors in the sector.