Massive divergence – Kai Hoffmann on why gold stocks should be trading higher
Generalist investors are still on the sidelines when it comes to gold, noted Soar Financial CEO Kai Hoffmann.
On Thursday Hoffmann spoke to Kitco. Hoffmann is hosting Deutsche Goldmesse in Frankfurt, Germany. The 2023 fall event kicks off November 24. Headliners include Lobo Tiggre, Thorsten Polleit and Michael Howell.
Hoffmann said the gold sector needs a spark. The metal has had high sustained prices through 2023, but the GDX, an index of gold companies, is still down for the year.
"It needs a bit of a trigger…to get generalists back into the market," noted Hoffmann. "It'd be great to see like a $50 to $100 move in a day, which is massive for a 5,000-year-old relic. Mainstream media might jump back on it."
Mining has been enjoying a lift from energy transition and all the metals needed for building fleets of electric vehicles, but Hoffmann likes beaten up precious metal companies.
"What's more contrarian than being a gold mining stock investor right now? If you look at how the stocks have performed and look at the gold price, there is a massive divergence. The stocks should be trading a lot higher."
While sentiment towards the resource sector has soured, Hoffmann described financings as mixed. He said the Oreninc index, which measures investment flows in the resource sector, is at a near average.
"We've seen way worse," said Hoffmann. "The index is including a lot of the flow through financings right now. In November half the money raised went straight into flow-through financings."
Hoffmann noted that early-stage companies are having a tough go of it.
"The grassroots explorers are hurting right now. There is no money for them. It doesn't matter what commodity. Unless you have a sexy project and an amazing management team, you're not getting any money from the market right now."
By
Michael McCrae
For Kitco News
David