When markets correct, it’s normal to look for the bottom of the move as an entry point… or just to know when the bleeding will subside. Gold is trading at its worst sentiment reading since 1990, and the first half of 2018 has many commodities traders and investors concerned.
Anyone who participates in the precious metals markets will surely want to know what the endgame is for the yellow metal, which serves as a barometer for precious metals generally.
Seeking a sense of direction on this matter, Portfolio Wealth Global spoke with Michael S. “Mickey” Fulp, a Certified Professional Geologist, veteran mining analyst, and commodities expert. Mickey is known as the Mercenary Geologist, and he owns and writes for the website MercenaryGeologist.com. Mr. Fulp is well-known and highly respected throughout the mining and exploration community for his ongoing work as an analyst, writer, and speaker.
Mr. Fulp has 35 years of experience as an exploration geologist and analyst working with base and precious metals as well as industrial minerals, coal, uranium, oil and gas, and water. In this capacity, he has traveled throughout North and South America, Europe, and Asia. Mickey has worked for junior explorers, major mining companies, private companies, and investors as a consulting economic geologist for over 20 years, specializing in geological mapping, property evaluation, and business development.
Courtesy of Twitter, Mickey Fulp
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So clearly, to say that Mickey Fulp knows commodities would be the understatement of the year. In addition to his professional credentials and experience, Mr. Fulp is high-altitude proficient and is bilingual in English and Spanish. From 2003 to 2006, he made four outcrop ore discoveries in Peru, Nevada, Chile, and British Columbia.
Getting down to the nitty-gritty, Portfolio Wealth Global directly asked Mr. Fulp why the price of gold has dropped so low recently. According to Mickey Fulp, the price drop was not unexpected and there is seasonality to gold: the summer doldrums are a time when gold often reaches a seasonal low and sometimes even a one-year low. That factor would at least partially account for why we’re at a 52-week low for gold.
Another factor to consider, according to Mickey Fulp, is the strong U.S. dollar. There typically is a strong negative (i.e., inverse) correlation between the U.S. dollar and gold, and that has been particularly in effect since the beginning of the year. The U.S. dollar is up about 7% since April, with gold being down around 9% or 10%, and normally one wouldn’t expect a precious metals rally until after Labor Day. At that point in time, we should see gold move at least a little bit higher.
Courtesy of BTV News
Gold miners have also had a challenging time, as the mining sector has been in a bear market since 2011. Some investors might wonder who is doing the selling right now, with some mining stock prices selling even below the founder’s share levels. But according to Mickey Fulp, there’s actually not a lot of selling going on; what’s actually going on is a lack of liquidity.
As Mickey Fulp explains it, there are very few bids in the mining space, and generally when you have a non-liquid market with low volume, which we’ve seen since January, prices are going to go down. Hence, there is just not a lot of interest in the gold mining sector right now, all the way from the major gold miners to the smaller firms.
So, what is Mickey Fulp doing with his capital now? He is buying both physical gold and gold stocks; the physical gold is something Mickey views as a safe haven, but he is also very selectively purchasing some fundamentally sound gold mining stocks. In particular, Mr. Fulp likes to play the advanced explorers on the Toronto Venture Exchange, which he believes are on sale right now and are, in some cases, trading at their 52-week lows.
Portfolio Wealth Global is thrilled to have spoken with Mickey Fulp, and we’re proud to bring you his insights into the gold and miners markets. To get educated on the gold bull market that is just weeks away from hitting full throttle, download our exclusive Gold Playbook. Also, you can get immediate access to our exclusive report on the coming stock market crash right here. Plus, you’ll definitely want to learn how to shelter your portfolio from the bonds collapse with Portfolio Wealth Global’s Bonds Report.
Research Partner, PortfolioWealthGlobal.com
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