Self-taught investor and founder of JuniorMinerJunky David Erfle spoke with the Investing News Network (INN) ahead of his talk at the International Mining Investment Conference in Vancouver, sharing his thoughts on where gold might be headed in the near term.
It’s the greenback that’s moving the precious metal at the moment, according to Erfle, who said that he wouldn’t be surprised if gold fell to US$1,280 per ounce if the US dollar keeps heading skywards. While gold is currently trading at US$1,303.90, at the time of the interview it had fallen below $1,300 for the first time in months.
Erfle also shared tips on how new gold investors might do their homework, having taught himself — he has plenty of stories about companies that have been and gone, some of which he went with and some of which he sold too soon.
His top picks at the moment are Novo Resources (TSXV:NVO) and Marathon Gold (TSX:MOZ); he elaborates on why in the video above.
Watch the interview for more insights from Erfle on what gold is up to, or read the full transcript below.
INN: So, in the last year the price of gold has gone up roughly about a $100 a pound, what’s driving that, are there any signs it’s going to continue or is there a change coming?
David Erfle (DE): Well if it went up a $100 a pound, I’d really be happy [chuckles] but lately we had the price come out of a consolidation pattern between US$1300 and US$1365, it was there for about four months and since it didn’t break out, basically the shares were telling you as it wasn’t going to break out. What doesn’t break out breaks down, so that’s what happen this morning. That gold sliced through US$1300 and stopped run going on the future market right now. So, I wouldn’t be surprised to see US$1280 gold very soon.
INN: Okay and what do you think is driven that?
DE: The US dollar mostly. The US dollar has resumed its climb, it’s over 93 again and I wouldn’t be surprised if it hit 95-96 on a cash settle index and even if the skirmish in the Middle East has not done anything to the gold prices, it’s all about the US dollar right now.
INN: Okay. And so dealing mostly in juniors, are there any interesting success stories out there right now that your average investors would mind knowing about?
DE: Yes. Well, the biggest success story for me, my subscribers and my readers at KITCO has been Novo Resources (TSXV:NVO). Sure everybody already knows about that one but there’s another one that I really like called Marathon Gold (TSX:MOZ), they’re not at the show here but they’re about to put a PEA out on their valentine lake gold camp this week. It’s in Newfoundland they’ve already proved up 2 million measured indicated and another million inferred of a little less than 2 grams per ton and their PEA’s going to be out this weekend and it should be very good.
INN: Can you share any stories about investment opportunities that you might have missed along the way once that you wished that you would jumped on?
DE: Well, there was one I had and sold which was Kirkland Lake (TSX:KL), it’s funny I ended up– I purchased both Kirkland Lake and Crocodile Gold in about the same time. The Crocodile Gold was taken over by New Market and then Kirkland Lake took over New Market and I ended up selling everything and that was a bad mistake because the [chuckles] share price just keeps going up but I did really well on the initial investments so I should really be complaining.
INN: Okay. And so, can you tell me a little bit about what drives gold? What should somebody interested in gold be watching for tips on where the price might be headed besides your newsletter?
DE: As far as the price of gold in concerned? Well, watch the 1250 level, watch that level very carefully because if gold goes below 1250 that would not be very good because I think the market are already priced in solid floor there. So, do I think it’s possible to go down there? Yes, I do because like I said earlier the US dollar could very easily go to 95-96 on this run and if it does then I wouldn’t be surprised to see gold get down to that level. The shares via the GDX and the GDXJ have been holding up really well here but today obviously I don’t know what they’re doing today but the 21 level on the GDX needs to hold as well because if it doesn’t they’ll be some stops run also in the GDX. So, watch carefully the GDX level at 21 and watch carefully the 1250 level in gold.
INN: Okay. And so you were self taught investor. In 2018, what would a new investor starter kit look like?
DE: Well, a cashed-up account without margin because if you are going to play in this sector, you can’t use margin. There’s enough leverage in these things already if you invest in the right companies but it is saying that it is a stock pickers market. So, my presentation today will be about just that, how to build and maintain a junior resource stock portfolio. So, you just have to do diligence, make sure that the companies have really good management, are cashed-up through, at least through this year, have a tight share of structure, have a project and safe jurisdiction that has district scale upside potential. That will weed out a lot of companies because most companies don’t have that.
INN: Okay. And finally, is there anything extra that you’d like to add?
DE: Well, my newsletter is called …read more
From:: Investing News Network