Summa Silver Corp. (TSXV: SSVR, OTC: SSVRF, FRA: 48X)
Silver Lives Here
When the price of gold first broke above $3,000 per ounce, it sparked a discussion about whether the price of gold would correct downwards. After that, the price of gold has risen all the way to $3,500 per ounce, hitting multiple new all-time highs.
While volatility in the gold market has risen significantly over the past week, the explosive rise in the price of gold toward $3,500 shows the great potential of the precious metal.
In a recent interview with Kitco News, Ryan McIntyre, managing partner of Sprott Inc. said that gold still has a lot of long-term upside compared to the overvalued stock market. In the current environment, gold has the potential to build a new foundation above $3,000, meaning investors have no reasons to be nervous about gold at current levels.
McIntyre added, compared with gold, the extreme high valuation of the U.S. stock market is more worrying. As inflation remains high, forcing the Federal Reserve to maintain a neutral monetary policy, companies sooner or later have to adjust their forward-looking earnings guidance to reflect the higher interest rate environment, which is a major headwind for the stock market.
McIntyre believes that at this stage we are seeing investors shift from US equities to other assets such as gold, which makes perfect sense. Over the next decade, the returns on gold are likely to be no worse than the returns on investing in US equities.
Spot gold last traded at $3,327.90 an ounce on Thursday (24 April), up 1% on the day. However, compared to Tuesday’s overnight all-time highs, gold prices have retraced about 5 per cent. Since the beginning of the year, gold prices have risen nearly 27 per cent.
McIntyre pointed out that investors are now facing more than just pressure on the stock market from a potential recession within the United States. More critically, the problems brewing in the global financial markets have risen to the level of sovereignty, especially in the United States, because the United States is undoubtedly the world’s largest economy. And there is really only one solution, and that is owning physical gold.
The fund manager reminded investors that the US dollar will obviously not lose its reserve currency status overnight, but there is no doubt that we will continue to see countries holding more of their own currencies, or holding some independent currencies such as gold.
Central bank demand will continue to support the gold price, making it an attractive haven for investors, even at high gold prices. While gold has re-emerged as an important global monetary asset, market sentiment also suggests that it still has significant upside potential.
