Gold's Secular Bull Market Intact, Miners Poised for Mania

Gold's long-term uptrend remains intact, and the miners offer the best leverage to it, according to Ronnie Stoeferle, managing partner at Incrementum and lead author of the "In Gold We Trust" report. His remarks came as the annual publication marked its 20th edition, with the price of gold having climbed from $650 to more than $4,000 an ounce over that span.

Stoeferle pointed to three consecutive years of central bank purchases above 1,000 tonnes, a fixed-income market worth $147 trillion, and global gold allocations of only about 3%. He called that allocation "pocket change" relative to the scale of the bond market, and said the secular bull market is still in its early stages.

"We leave bottom-picking to the proctologists," Stoeferle said, "but the secular bull market is intact."

The interview was released by King World News on Tuesday, alongside a separate audio discussion with Michael Oliver, founder of MSA Research. Oliver said the price of gold has to reach $8,000 or $9,000 just to match the gains of the 1970s. He predicted the public will eventually panic into gold and miners, and that oil will trade in the hundreds of dollars.

Oliver also said mining stocks could become the new tech stocks, heading into a mania as gold and silver prices rise. He credited Tavi Costa of Crescat Capital with a chart showing free cash flow per share at gold miners skyrocketing.

The comments come as the yen intervention by Japanese authorities appears to be fading. Peter Boockvar, chief investment officer at Bleakley Financial Group, said the fresh attempt to rally the yen will likely be fleeting unless the Bank of Japan hikes rates in September and signals more to come. He noted that the use of the Federal Reserve's Foreign and International Monetary Authorities repo facility to fund yen purchases has to be repaid, and questioned where that money will come from.

Market pricing for a BoJ rate hike at the September meeting has risen to about 50%, up from 27% last Wednesday before the intervention. The two-year Japanese government bond yield is at a fresh 31-year high, and the 10-year yield sits just two basis points from a 29-year high. That has helped drag the US 10-year yield back to 4.70%, while European yields are little changed.

"We're all in this bond boat together," Boockvar said.

Stoeferle's comments echo the view that gold is in a structural uptrend driven by central bank buying and fiscal concerns, a theme covered in our commodities analysis. For investors seeking exposure, the best commodities brokers list offers a starting point.

Oliver's prediction of a mania in mining stocks suggests the sector could see outsized gains, though he did not provide a specific timeline. He said the public will eventually panic into gold and miners, and that oil will go into the hundreds of dollars. The interview is available on the King World News website.