The Gold Report: The Junior Gold Report follows both gold and oil equities. Please briefly outline your outlook for both commodities.
Kal Kotecha: In December, to my Junior Gold Report subscribers, I called gold to hover between $1,180/ounce ($1,180/oz) and $1,250/oz from January until about June, and then averaging above $1,250/oz for the rest of the second half of 2015. So far, it’s been range-bound between $1,180 and $1,250/oz. I expect gold to average above $1,250/oz throughout the second half of 2015 before moving quite a bit higher in 2016.
At the time of our interview with The Gold Report in September 2014, oil was trading around $100/barrel ($100/bbl). I indicated that oil would be range-bound between $60/bbl and 70/bbl but I didn’t expect it to drop so quickly under $50/bbl. Now, with many tankers full of oil yet to port, oil could test $42/bbl and if it falls below that, it could go below $40/bbl. I wouldn’t be buying oil or oil shares until we see Saudi Arabia charging more for oil globally—it announced it is currently doing this with its E.U. trading partners. I would be accumulating in and around June when there will be less stock available from the full oil tankers.
Oil fracking companies in the Unites States need oil at least $60–65/bbl to be above the marginal cost of production, so I believe oil ultimately is going to be sitting between $60/bbl and $70/bbl. I don’t think we’re going to see $100/bbl oil any time soon, but I also don’t think we’re going to see oil below $30/bbl as we did a few years ago. It might just remain range-bound between $42/bbl and $55/bbl for the next few months and go slightly higher than $60/bbl and stay there.
TGR: Late in 2014, you …read more