Adrian Day: Gold Sentiment Terrible, but its Time is Coming “Very Soon”youtu.be
As the US dollar continues to reign supreme, gold is facing apathy from investors.
Speaking to the Investing News Network, Adrian Day, president of Adrian Day Asset Management, said that sentiment toward the yellow metal is the worst it could be — but that’s good news for contrarians.
In his view, there’s no question that current circumstances have created a buying opportunity for both gold and gold stocks. He sees a turn in pricing coming “very soon,” and said it’s important to position before that happens.
“When gold turns, it can turn very, very dramatically, this time in particular because so many people are underinvested in gold and gold stocks,” he said. “People are truly underinvested — there’s just a total lack of interest in gold at this point, so when the sentiment changes, we could get a very sharp turn. And the risk of not being invested now is that you miss out.”
Looking at gold stocks in particular, he pointed out that other than the fourth quarter of 2015, which marked a bottom in the gold price, stocks haven’t traded at a lower price to free cash flow ratio this entire millennium.
“The gold stocks are incredibly cheap — that’s what makes this a little bit easier to buy the gold stocks in my mind as a value investor. You’re not having to hold your nose and buy something that’s expensive, you’re buying some of the best-quality gold-mining companies at their lowest valuations in 20 years,” Day explained.
For now, however, the gold sector is still waiting for the US Federal Reserve to run out of moves.
“When the macro environment changes — when people realize the Fed’s going to cause a dramatic recession and still not bring inflation down to a modest level — we’re going to have stagflation. People will (ask), ‘What do I buy in stagflation?’ And gold is the obvious answer. So the move into gold I think will be quite dramatic when it happens.”
Watch the interview above for more from Day on gold and what’s next from the Fed. You can also click here to read our recap of the New Orleans Investment Conference and here for our full event playlist on YouTube.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
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