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Jekyll Island Series – Greg Orrell: Broader Market is Constraining Gold

Greg discusses the OCM Fund which he manages. The fund is deployed in the resource sector. They started with the premise that gold is the pre-eminent form of money. He says they have yet to see the worlds radical monetary measures play out and when that occurs there will be a shift back to gold. Gold reveals the monetary debasement of currencies, and this has been ongoing globally. Currently, we are in a sweet spot for gold investors since the rest of the world’s money is focused on regular markets.

He thinks that early-stage companies are where the value is found particularly with junior producers that have a high exploration upside. He is interested in those companies that have existing cash flow and can generate high-value creation through drilling.

The OCM fund has two major positions in Randgold and Agnico Eagle both of which are up several hundred percent. They ride the winners and sell when things change. They actively monitor the management of these companies.

Greg feels the broader market is currently constraining gold. These markets are sucking much of the wealth of the world to stocks. Currently, they don’t see much defensive posturing; as a result, the pool of capital in the gold sector is not growing now. When the market corrects, or inflation expectations increase you will see defensive money flow into this sector.

There is hidden collateral damage from the Federal Reserves actions which will inevitably manifest.

Talking Points From This Week’s Episode
• Gold markets are constrained by the broader markets.
• When inflation expectations increase or the markets correct, you will see funds flow into gold.
• Good time to invest in the gold market since it is under-appreciated.
• He feels the failed policies of the Federal Reserves over the past several years will eventually manifest.

Greg Orrell has been the portfolio manager of the OCM Gold Fund since 1996. He is one of the longest-tenured gold fund portfolio managers in the industry. With over 30 years of investment experience in the precious metals mining sector along with a deep understanding of gold’s monetary role, Greg is uniquely qualified to manage the assets of the fund.

Greg received his BS in Economics and Business Administration from Saint Mary’s College of California. Greg is also the president of Orrell Capital Management, investment adviser to the Fund, and received his BS in Economics and Business Administration from Saint Mary’s College of California.