Goldwatcher – More Sunshine, Less Stormy Weather

During a recent presentation at the World Money Show in Orlando, Frank Holmes gave a presentation titled “Goldwatcher – More Sunshine, Less Stormy Weather.” As the CEO and Chief Investment Officer at US Funds, Frank Holmes runs several funds including a precious metals, natural resources and emerging markets funds.

The full presentation is really worth reading. It is accessible on this page. Out of the 77 slides, we have selected a couple of them with interesting insights.

The technicals of gold bullion look good. The gold price recently flashed a full buy signal. During the whole bull run since 2001, the oscillator has been only a few times in a comparable condition.

gold_price_positive_technicals

The drivers of gold are ironically simultaneously what people call a “fear trade” and a “love trade.” The fear trade applies mainly (but not only) in the West where the economies are being flooded by additional liquidity (“money printing”). In contrast, the East has always shown a love for gold; it has been part of their culture historically to buy gold as a gift for weddings and festivals. The fundamentals in the East show an appreciation of people’s purchasing power justifying a continuation of their demand for physical gold. Those ideas are summarized in the following slides.

money_flowing_to_asia

gold_love_trade

gold fear trade

Frank Holmes also talked about the gold stocks. While the disappointment of the shares has been prevalent over the past 2.5 years, today’s undervaluation is so extreme that it is very reasonable to expect a rebound. Investors should really understand the difficult conditions in which gold and silver miners are operating. The following two slides summarize the most important two  challenges.

gold_stock_costs_rise

gold_stock_grades_fall

This article showed only some highlights of Frank Holmes his presentation. Please click here for the full presentation. We recommend signing up for Investor Alert Today, a free newsletter with investment tips from Frank Holmes: USfunds.com/subscribe.

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