Latest / Bloomberg Intelligence / Sprott's Smirnova on Gold: Still Seeing Lots of Upside (Audio)

Transcript

Sprott's Smirnova on Gold: Still Seeing Lots of Upside (Audio) · Bloomberg Intelligence

• 0:00
  Speaker 1: You're listening to Taking Stock with pim Box and Kathleen
• 0:04
  Speaker 1: Hayes on Bloomberg Radio. Gold the mirror image of the
• 0:08
  Speaker 1: stock market for the last two trading sessions, rising for
• 0:11
  Speaker 1: a second day today, adding to the biggest search in
• 0:15
  Speaker 1: seven years on Friday. Uh The fallout from UK's decision
• 0:19
  Speaker 1: to leave the EU is boosting the demand for gold
• 0:22
  Speaker 1: as a safe haven after many factors have been boosting
• 0:25
  Speaker 1: it so far this year. Will it continue? What does
• 0:28
  Speaker 1: it mean for some of the gold companies like Barrick
• 0:31
  Speaker 1: and Newmont Mining. Well, let's put that question now to
• 0:34
  Speaker 1: Maria Smirnova. She's portfolio manager at Sprout Asset Management. Welcome back, Maria, Hi, Kathleen,
• 0:41
  Speaker 1: great to be here. Well Gold, how long will this
• 0:46
  Speaker 1: Brexit impact last? Is this you know, everyone's kind of
• 0:49
  Speaker 1: trading fast and furious. Maybe you had a position you
• 0:53
  Speaker 1: had to cover one way or the other, so you're
• 0:54
  Speaker 1: buying or selling gold or whatever it is. Or is
• 0:56
  Speaker 1: this this is really going to cement this trend higher
• 1:00
  Speaker 1: in gold for a while. Well, certainly the Brexit decision
• 1:04
  Speaker 1: on Friday or on Thursday was a surprise to the
• 1:07
  Speaker 1: market in general, but we've believed in gold you know,
• 1:11
  Speaker 1: for a long time now, we've become increasingly bullish from
• 1:15
  Speaker 1: the end of last year at the beginning of this year,
• 1:17
  Speaker 1: and we actually believe that the fundamentals that have been
• 1:20
  Speaker 1: driving gold and silver higher this year UM have been
• 1:24
  Speaker 1: there and are there and will continue. So we don't
• 1:26
  Speaker 1: think that the Brexit vote is you know, at one
• 1:29
  Speaker 1: time event. We do think there's lots of upside left
• 1:33
  Speaker 1: and gold going forward. Why uh, The fundamental reasons that
• 1:38
  Speaker 1: we think, you know, are driving the drivers are slowing
• 1:42
  Speaker 1: global economies and central banks around the world trying to
• 1:45
  Speaker 1: stimulate their economies and as a result of that, UM
• 1:49
  Speaker 1: yield dropping all around the world. You know, we talk
• 1:51
  Speaker 1: about US yield the tenure being at one right now,
• 1:55
  Speaker 1: that's down from previous years. We are looking at the
• 1:59
  Speaker 1: Fed not raising rates as much as we thought. Even
• 2:03
  Speaker 1: last year, we thought we'd have four rate hikes this
• 2:06
  Speaker 1: year and you know, we're not having that. In fact,
• 2:09
  Speaker 1: I believe the probability of right hike now being factored
• 2:12
  Speaker 1: into the market is zero close to December, so a
• 2:16
  Speaker 1: lot has changed from last year, and the outlook for
• 2:20
  Speaker 1: the global economy is quite different today than it was,
• 2:23
  Speaker 1: you know, even six months ago, and those things are
• 2:26
  Speaker 1: the fundamental drivers for gold right now. So how do
• 2:29
  Speaker 1: you characterize the fundamental view of the global economy now
• 2:33
  Speaker 1: compared with six months ago? What is your view? And
• 2:37
  Speaker 1: I think what you're referring to broadly isn't just your view,
• 2:39
  Speaker 1: but how you perceive the view of all the investors
• 2:43
  Speaker 1: around the world who are helping to fuel this gold
• 2:45
  Speaker 1: rally right exactly. Um, we think that the the perception is,
• 2:51
  Speaker 1: you know, has deteriorated in terms of the growth prospects
• 2:55
  Speaker 1: of the world. We talked about China, we talked about
• 2:58
  Speaker 1: the US is the bright pot in the world. Right.
• 3:01
  Speaker 1: The economy is growing at two to three percent, let's say,
• 3:04
  Speaker 1: but it's it's I would say, it's considered tepid growth, right,
• 3:08
  Speaker 1: it's not robust growth. And like I said, the FED
• 3:12
  Speaker 1: has been signaling um fewer rate hikes this year UM
• 3:16
  Speaker 1: and and that's had a tremendous impact on the markets
• 3:19
  Speaker 1: and how the markets view gold. So when you look
• 3:23
  Speaker 1: at Barrack, when you look at Newmont, I mean Goldman
• 3:27
  Speaker 1: Sachs says that Barrick Gold is now a conviction by
• 3:32
  Speaker 1: they see gold averaging even higher than they thought before.
• 3:36
  Speaker 1: Does this make sense to you. Do you agree, Well,
• 3:39
  Speaker 1: I think we think that gold stocks in general are
• 3:42
  Speaker 1: a buy, and of course gold stocks offer leverage to
• 3:45
  Speaker 1: the gold price. So we're you know where, we have
• 3:49
  Speaker 1: a whole um gold portfolio management team, and we're fully
• 3:52
  Speaker 1: invested in a whole variety of names, from the seniors
• 3:56
  Speaker 1: such as Barrack to the juniors. Were continuously adding in
• 4:00
  Speaker 1: changing our portfolios. We've actually been adding more junior names
• 4:04
  Speaker 1: for that leverage in the portfolio. Junior names like who
• 4:10
  Speaker 1: well uh um. When we talk about junior names, these
• 4:14
  Speaker 1: are generally exploration and development stories. So I'm probably not
• 4:18
  Speaker 1: at liberty to discuss individual names, but um all, I
• 4:22
  Speaker 1: will say these are smaller companies, you know, there may
• 4:25
  Speaker 1: be just entering production versus Barrick of course, as a
• 4:28
  Speaker 1: mature company with multiple minds all all around the world,
• 4:32
  Speaker 1: and we have, you know, a whole basket of these
• 4:35
  Speaker 1: names that we are very positive right now on most
• 4:40
  Speaker 1: gold names. I would say, so right now, spot gold
• 4:43
  Speaker 1: uh today trading around one thousand, three hundred twenty six
• 4:47
  Speaker 1: dollars and change the futures price just a little bit
• 4:50
  Speaker 1: higher than that. You say that thirteen sixty is the
• 4:56
  Speaker 1: resistance level after that four hundred. Duke's back that thirteen
• 5:01
  Speaker 1: sixty level to be challenged anytime soon. If the market
• 5:04
  Speaker 1: breaks that level and rises higher. Is this another bi
• 5:07
  Speaker 1: signal for gold? Absolutely, It's pretty difficult to call timing,
• 5:12
  Speaker 1: I would say, but definitely if we go through thirteen
• 5:16
  Speaker 1: thirteen sixty and then after four hundred, there's very little
• 5:20
  Speaker 1: resistance because don't forget, we've come a long way down
• 5:24
  Speaker 1: in the bear markets, so now we're pretty much retracing
• 5:28
  Speaker 1: um that bear market, but on the way up. So
• 5:32
  Speaker 1: we don't see a lot of resistance at the hundred level,
• 5:35
  Speaker 1: and we'll get pretty bullish if we go through that level.
• 5:39
  Speaker 1: And uh, what is the next? Just really quickly about
• 5:42
  Speaker 1: thirty seconds, what is the next? Like sort of is it?
• 5:45
  Speaker 1: Is it breaks? It? Is it? What happens within the EU?
• 5:47
  Speaker 1: As an Italian banking crisis bank in Japan? What's the
• 5:50
  Speaker 1: key event you're watching next for gold? Um? I don't
• 5:53
  Speaker 1: know if I have a key event. We're certainly watching
• 5:56
  Speaker 1: what the Fed is saying and doing very closely. We
• 6:00
  Speaker 1: think that Brexit and that the outcome of the vote
• 6:04
  Speaker 1: will take a while to be digested by the markets
• 6:09
  Speaker 1: all around the world. We're watching volatilities around the world.
• 6:12
  Speaker 1: We're watching currencies, We're watching a lot of factors um
• 6:16
  Speaker 1: correlations between various factors UM. We're watching out for contagion. Basically,
• 6:22
  Speaker 1: if there is contagious and it's spreads and we have
• 6:26
  Speaker 1: a financial crisis, that could have affect our outlook. Okay,
• 6:29
  Speaker 1: Maurice Mirnova, thank you so very much. Portfolio managers brought
• 6:32
  Speaker 1: asset management joining us from Toronto. I'm Kathleen Hayes. This
• 6:37
  Speaker 1: is taking stock on Bloomberg Radio.