John Hathaway: Buy gold like it’s 1999

Intervju med John Hathaway hos The Gold Report: Buy Gold Like It’s 1999

Några rader:

The Gold Report: In a 4th of July investor letter, you wrote that the precious metals complex, both mining shares and bullion, appear to be in the process of completing a major bottom, and you’re more comfortable with the proposition that the downside potential has been fully exhausted. What are the signs that it’s really turning this time?

John Hathaway: The gold futures chart is showing that we are in the process of a reverse head-and-shoulders pattern, which is a sign that a bottom has been completed. It means that downward momentum has been exhausted. This bottom will be confirmed when gold trades above $1,400/ounce ($1,400/oz), which is a stretch from where we are. At least we can say fairly credibly that it’s shaping up to be a bottom, but we may test it over the summer.

TGR: You have compared gold’s fundamentals today to the situation in 1999. What were the fundamentals 15 years ago?

JH: Fifteen years ago, we were at the end of a 20-year bear market, so the psychology was very negative. Gold was never mentioned in polite discussions. We’re not that different today from where we were then. Considering the drop from a high of $1,900/oz to slightly less than $1,200/oz, that’s a pretty big decline in the space of two and a half years. That makes the setup similar to what we experienced in 1999. Back then, the markets were flush with optimism, and I would say that’s the case today. I think there are many parallels.

TGR: What words of wisdom do you have for investors who may have been in the gold space over the last three years or are just thinking about getting back into it?

DG: We believe that investors should consider gold and gold exposure as an alternative asset class and as part of an overall portfolio. While there are attractive values in the gold space, investors should think about having broad exposure to the gold sector, whether it’s through bullion, mining companies in different stages of development, or producers. Each avenue carries different opportunities and risks. That is why a group of precious metals stocks mixed with an exchange-traded fund or a gold mutual fund can serve an investor better than having just one name.

Additionally, I would recommend that investors average their investment over time instead of buying all at once. The gold price is volatile and it’s very difficult to get the low points. Averaging over time when the price dips can help financially and mentally even out the ups and downs.

Finally, consider gold as a very long-term investment, not just a two- or three-year investment. We believe it should be a permanent part of an overall portfolio as a non-correlated asset. It doesn’t really have counterparty risk and it trades to a different type of profile than other financial instruments. That’s why we recommend having a portion of a portfolio allocated to gold and gold mining equities.

 

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