Matthew O’Keefe, vice president and senior analyst with Dundee Capital Markets, says big gains—50% or greater—in mining equities can come when stocks get rerated. That typically happens when explorers make a significant discovery, developers turn into producers, and producers become even bigger producers. In this interview with The Gold Report, O’Keefe discusses two companies developing gold projects with beefy economics and five producers with healthy growth profiles.
The Gold Report: Some market experts believe central banks have no more bullets left in their attempts to stimulate global economic growth and that could lead to a worldwide economic downturn. What is Dundee Capital Markets’ outlook over the next 18–24 months?
Matthew O’Keefe: The strength of the U.S. dollar is still a headwind against a rising gold price. With the expectation of U.S. interest rates rising and U.S. economic data pointing to a stronger dollar, there is not much conviction that we’re going to get a major uptick in the gold price in the short term. Interest rates have been held down longer than anyone expected. The next kick will likely be in December when the U.S. Federal Reserve is expected to raise rates. What could strengthen the gold price are geopolitical concerns such as increased tension between China and the U.S. as the U.S. puts more patrols in the South China Sea or on heightened concerns over Russia’s involvement in Syria.
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TGR: Can investors make gains in the gold space without the broad market turning bearish?
MO: There are several different investment theses to look at in gold. The majority of investors who go into precious metals are there because they want gold exposure as a natural hedge against a U.S. dollar crash or geopolitical risk. Investors don’t generally get into gold stocks or any metal stock unless they believe …read more