I had a fascinating follow up interview with Erste Group analyst Ronald-Peter Stöferle, regarding his recent 2012 updated release of the "In Gold We Trust" gold report. We had another confirming conversation on the strength and durability of the current bull market in gold.
When asked about the current market sentiment Ronald said, "At the moment the sentiment is at the most bearish levels since 2008-2009, which for a contrarian is a very positive sign. . .I think during the correction we've seen all the speculative demand kind of being washed out."
In regards to an important pillar of strength underneath the gold price Ronald explained that, "Negative real interest rates are by far the most important factor—we're not seeing negative real interest rates only in the US and the Eurozone, we're seeing them also in China, in India, in Vietnam, in Turkey, and so-on. This is also a big chapter in my report, I think that emerging markets. . .are much more important for the demand side at the moment, much more important for physical demand than the US or the Eurozone."
With respect to the value to be found in the mining sector, Ronald added that, "You have to differentiate between both physical gold. . .and mining shares which are an investment. I think that both are very attractive at the moment, the risk reward ratio for gold mining equities is very, very attractive. . .I think it is one of the most underweighted sectors all over the globe. From a fundamental perspective, gold mining shares are really cheap."
This was yet again another must-listen interview for market students and participants of the precious metals space. Additionally, Ronald's report "In Gold We Trust" is required reading for anyone considering investing in the precious metals and mining sector.
Tekoa Da Silva
Bull Market Thinking