Jekyll Island Series – Greg Orrell: Broader Market is Constraining Gold
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Greg discusses the OCM Fund which he manages. The fund is deployed in the resource sector. They started with the premise that gold is the pre-eminent form of money. He says they have yet to see the worlds radical monetary measures play out and when that occurs there will be a shift back to gold. Gold reveals the monetary debasement of currencies, and this has been ongoing globally. Currently, we are in a sweet spot for gold investors since the rest of the world’s money is focused on regular markets.
He thinks that early-stage companies are where the value is found particularly with junior producers that have a high exploration upside. He is interested in those companies that have existing cash flow and can generate high-value creation through drilling.
The OCM fund has two major positions in Randgold and Agnico Eagle both of which are up several hundred percent. They ride the winners and sell when things change. They actively monitor the management of these companies.
Greg feels the broader market is currently constraining gold. These markets are sucking much of the wealth of the world to stocks. Currently, they don’t see much defensive posturing; as a result, the pool of capital in the gold sector is not growing now. When the market corrects, or inflation expectations increase you will see defensive money flow into this sector.
There is hidden collateral damage from the Federal Reserves actions which will inevitably manifest.