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Florian Siegfried: The Disconnect Between Gold and Gold Stocks Will Flip

Florian discusses where we are in the gold cycle and that we are past the bottoming in gold. In January 2016 we had the big run up until August, and since then things have been trading sideways. There were significant gains in miners, and some of this sideways action is profit-taking. The overall equity markets have seen good rallies, and the dollar remains weak. There is a disconnect between mining shares and the price of gold. We need to see fresh money rotate into gold stocks.

It’s an attractive time to enter some positions even though the gold market is currently rather dull. You can find good value in mid-cap producers. The rebalancing of GDX/GXDJ was hard on many mining stocks; there are still some good buys.

The stock market is always a good indicator of the economy, so the question is, have we hit an all-time high and is the general market about to roll over? The weak dollar has not been as supportive of the equity markets as it has in the past. Also, the interest rate environment appears to be reversing, particularly in the ten-year treasury and Libor rates. The bond market may no longer be supportive of the equity markets going forward.

He discusses Perseus Mining Limited and where they are at with their projects. He recommends OceanaGold and outlines how they have an excellent management team.

Talking Points From This Week’s Episode
• The disconnect between gold and mining shares should improve.
• Bond market no longer supporting the broader equity markets.
• For gold to perform well, it needs fresh money.
• The re-balancing of GDX/GDXJ was hard on many juniors, and there are still opportunities.

Florian Siegfried is Senior Portfolio Manager at AgaNola Ltd. and Head of Precious Metals Portfolio Management Group. He possesses in-depth investment management expertise, with particular know-how in precious metals, mining and private equity. Before joining AgaNola Ltd., he was CEO of Precious Capital Ltd., Zurich (Dec 2008 – April 2014), a specialized fund management company focusing on precious metals and minings. From 2005 to 2007 Mr. Siegfried was CEO of shaPE Capital Ltd., an investment company formed by Bank Julius Baer, which is listed on the Swiss Stock Exchange SIX. Florian Siegfried, born in 1972, holds a Master Degree in Economics from the University of Zurich and lives with his family in Switzerland.