Podcasts

Bob Hoye on why gold miners are winners during deflation

Market historian, geologist and Pivotal Events author Bob Hoye, talks to the GoldMoney Foundation’s Dominic Frisby about the real price of gold in times of post-bubble deleveraging, and the opportunities in gold mining shares – which he thinks could be on the verge of a great new bull market.

Hoye explains that gold stocks do very well during credit contractions. The crash of 2007/2008 was the end of a classic bubble, comparable to the 1929 bubble. History shows that such market manias are followed by long periods of deleveraging and contraction. During these times the price of gold in real terms – that is priced against a basket of commodities – increases, meaning vastly increased profits for gold mining companies.

Measured by the Relative Strength Indicator (RSI) the gold stocks are near historic lows. Hoye thinks that after retesting the lows, we could start a new bull market in gold shares in which even bad companies will see incredible share appreciation.

Contrary to many precious-metal analysts, Hoye thinks that the gold/silver ratio will head up instead of reverting back to its historic average, as silver typically does best in relation to gold during periods of accelerating inflation, which he is not expecting in the immediate future.

This podcast was recorded on 14 June 2012.