Gold prices are set to increase fivefold, perhaps soaring to as high as $5,000 an ounce. At least, that’s the gold price outlook of market veteran and renowned industry expert Rob McEwen says.
“Investors seem to be very complacent,” he explained in an interview with Mineweb.com. “The fact is, our dollar buys less than it used to. There’s a belief that central banks can control the markets but that’s not realistic.” (Source: Rob McEwen Interview: What’s hurting juniors more than the gold price, August 3, 2015.)
While the Dow Jones Industrial Average and NASDAQ are reaching ever-higher, the group of people investing in them is growing smaller. McEwen says many companies are simply executing buyback programs rather than actually focusing on productivity.
“A lot of companies are doing buybacks rather than improving their productivity. I do think we are seeing inflation and even though the government is claiming that there’s no inflation, there are very few items going down in value.”
The metrics used to indicate whether or not we are experiencing inflation may point to no, but the owner of McEwen Mining Inc. (NYSE:MUX) maintains that since money is buying less than it once did, inflation is happening.
McEwen’s primary reasoning, of course, is the hedging qualities of gold in the event of a financial crisis, which he does not rule out.
Indeed, not only is gold investment a sound insurance policy in case of an abrupt currency devaluation, but it also still maintains an attractive portfolio diversification quality. Allocating anywhere from five to 10% of your portfolio to gold is the sweet spot, says McEwen.
The rush to get out of the gold market is the herd mentality in practice, and much of the downward pressure can be attributed to the perceived worthlessness of gold as a commodity at the moment. It’s purely psychological according to McEwen, and the same people will be clamoring to buy the stuff at the first hint of a serious financial crisis.
The gold industry veteran is not all talk; he is personally the largest stakeholder in McEwen Mining, at 25%, and reinvests the profits earned back into the company.
What advice does McEwen have for gold investors?
Pay attention to a company’s balance sheet, and especially its debt levels. The smaller the debt level, the less likely they will have to rely on the market for financing. Companies that sell metal streams and royalties are to be avoided.
Investors: This Could Send Gold Prices Soaring in 2015
Like Rob McEwen, Profit Confidential founder Michael Lombardi also believes every investor should keep gold and silver in their portfolios. In a special presentation to readers, Lombardi points out the huge discrepancies between the paper and physical gold market, suggesting that speculators may be keeping prices artificially low. Further still, he outlines the three catalysts that could send gold prices soaring in 2015.