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McAlvany Wealth Management CEO David McAlvany on the factors he sees driving the price of gold higher in the year ahead.
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Son will 20:13.
-- -- golden year for precious metals.
My next guest thinks so he believes gold could touch 2300.
Box announcements here.
Definitely able David Mac over eighty CEO and president of -- of any wealth management joining me now -- Fox Business exclusive.
David thanks so much for joining us like since gold of I'm not mistaken -- about 19100 back box back in 2011.
We haven't been able to sustain any rallies to get it -- that point what.
Makes you think we will.
You know when we look at demand this is really what's driving the price in -- thirteen and 20:14 Central Bank demand continues to be very strong.
An investor demand even with slumping prices has been very constant looking -- ETF holdings we've been at 84 point six.
Million ounces that we haven't budged at all from peaks in fact we continue to see those numbers clients so.
Demand is one income of one part of the equation on the supply side.
We've got scrapped or recycled gold which is peaking this year and we think that that will be a critical driver as less supplies available.
Mine supply has always been an elastic but that one variable recycled gold.
Has spiked to three to four fold over the last five years and is now declining that should be critical critical factor.
David in the short term I would imagine that gold will probably see continuing to add to gains -- everyday that we don't get a fiscal cliff agreement immunity even if we go over the cliff but once the deal is done.
And that's a -- give I guess the once it is done -- we get the risk on appetite back and that's bearish for -- Well and believe it or not in the last year every time we did have something risk on gold and silver participated.
And I think that would be in an unhealthy fashion as just a small market and very little capital flowing into it.
We saw some influence in terms of price -- price action but I think you do have macro issues which are going to drive concerns in this new year.
Central banks from around the world we'll continue to print the Bank of Japan.
Being influenced by mr.
-- -- in this next year will throw their hat in the ring along with the ECB.
The bank of England and the Fed as they print and try to monetize their way to recovery.
Well you bring up a good point people buy gold I guess I hate to hedge against inflation as you as you point out but also as a safe haven against you know crisis and we've seen the weather.
The financial crisis fairly well yes we have this fiscal cliff facing us but if you look at inflation and you look at that safe haven.
I don't know what is gold really fit that that Bob mold for for those reasons.
He and and actually as an inflation hedge it does not keep up and real time.
I think what you see more reflected in the gold bet today is sophisticated investors and central banks.
Actually betting against big government.
And it's particularly in the investment area EC investors who are saying.
Policy measures are not gonna be adequate to deal with fiscal issues in coming years you know the fiscal issue is it that we that we face of the fiscal cliff is just the tip of the iceberg.
We're still dealing with a trillion dollar deficits this next year -- earlier guests for pointing out that we have yet to come up with a 2013 budget.
We've had three budgets rejected even by the Democrats so is that this is really challenge.
Major fiscal concerns and what will -- the recourse the in the marketplace.
So as investors listen to you David what is -- your advice then what's the best way to play this.
Well I think three things are imperative coming in the -- thirteen.
Let's start with the non gold play which is I think increasing cash positions very under appreciated asset allocation but important coming -- 2013.
I think you may have some.
Opportunities to buy things -- the cheap as we move into 2013 and 2014 in the general equity space but I would allocate to gold bullion.
And I would allocate to the minors which have woefully underperformed.
Embarrassingly.
Underperformed the gold market.
They're sitting at about thirty year lows relative to gold.
And so I think a bit of catch up if we do exceed the 2000 mark on the bullion price.
You're going to see shares that are interest that in in in that space again the miners who -- bringing out gold and silver from the ground.
I think do very well in that context of why is it to David that those miners -- lag behind what's the reason.
I think part of it is the substitute through the ETFs exchange traded funds have have captured a huge amount of interest.
And you're not taking accounting -- not taking.
Nationalization -- not taking.
-- all of the risks that go into either regular company or something as bad as in mining company I say as bad as because they're notoriously weak in terms of yeah.
Of companies as the way to run -- -- so.
Is do we see an alternative someone can play the gold space and not take on added risk.
The ETFs have been siphoned off a lot of interest in addition you've had oil prices climbed four to five fold -- from from the you know where they were.
Ten years ago so that's one of the largest input cost for these miners.
David thank you so much for joining us David -- of any CEO president of lack of any wealth management 2000 of the -- -- 100 bucks by the end of next year David says thank you so much about an hour.
