You're watching...
Midas Fund Portfolio Manager Tom Winmill on the factors that could boost the price of gold.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
-- gold futures.
Soaring last week posting their best weekly gain since January but our next guest says we are only a third of the way through this current -- pop.
I'm windmill is the portfolio manager of the -- -- -- and he joins us now.
How exactly do you mean by that is cool decrees that you're calling for.
Well I think goal is going to figure largely particularly in this next quarter -- With the fiscal cliff causing a lot of uncertainty -- concern right now I think we're gonna see a bunch of heroes created in the senate.
In the in the president's office a lot of people are gonna going to distinguish themselves and getting this -- by this fiscal cliff and I think investors are going to flood into the market with a huge sigh of relief that's what we're looking at it might -- what we saw the last time we had a many fiscal clip that was about a year and a quarter ago.
And we have the debt ceiling that component of -- fiscal that they'll be repeating and a few months.
When that was negotiated we raised the that ceiling -- gold has responded with a 30% rise and we think we'll see that again.
While bide away your very optimistic about the end play of the of this says this fiscal cliff I hope you're right that they come together.
No guarantee that there will be why then that if you're right if if we've got about a 30% were -- -- to the upside with gold.
Why has it been down past couple of days today -- it was a slow trading day granted but it was down a couple of bucks.
That's right it was went down a little bit that's been up and down it seems to be trading.
Rapidly on on events from the the European crisis and now people are waiting for the the open market committee minutes the Bank of England recently decided it was going to USC's asset purchase that might have been -- negative on gold but.
The big picture still very positive for hard assets such as -- we CA.
-- percent CPI irate so the inflation rate is well in the -- well ahead of interest rates that.
Target rates of zero to 25 basis points that's underlined -- sound.
Investment in hard assets such as -- then.
The equities particularly have underperformed the gold mining equities were very bullish on those because -- they have -- the gold price have gone up making the disconnect even greater.
Should equity markets recover particularly gold equities account secrecy a dramatic increase in this last quarter.
I think that's really interesting -- that there's an investor out there that everybody knows Jim Rogers.
-- -- severely disagree with you and say that if you believe that the price of gold is going to go higher.
Then by -- don't mess around with the company when -- the -- around with the management of the firm.
And all those other things why such as well buy gold itself but why -- -- equities why the stock's.
Well that's a really good question then for risk adverse investors I think.
The metal probably is the way to go but if you look at the actual numbers.
Gold equities sense of performance -- to the gold price so for instance if you think the gold prices go up 1% the gold equities tend to go up about.
2% and that's because -- operating leverage so that they have -- of 600 dollar per ounce costs to get it.
Announce a goal that the ground so a hundred dollar increase in the price of gold.
It's significant if you already take out that chunk of operating expense of their their earnings respond dramatically one of the ones that.
Is a major that has a big leverage the gold prices kinross.
Kinross has high band is but they have a very prominent how to positive West Africa.
To become very lucrative if the gold price continues to say these levels or even go higher.
Okay by the way final quick question assuming that your scenarios right now -- somehow congress comes to some sort of deal up.
On the fiscal cliff issue one year from today what will the price of an ounce of gold it.
We think will be here -- between 200 dollars an ounce were looking for 19100 dollars by year and that might -- most conservative at this point.
But we think that investors will get back in the Golden State there.
That doesn't sound like a gold crazy aunt that still still a little bit pregnant on your friends are I have updated and -- both -- gold ties on let's let's hope for the best.
Talk thank you very much good to see a time when bill Midas fund portfolio manager looming tax.
