With the price of gold and silver tumbling recently, today legendary Pierre Lassonde told King World News that the super-wealthy are now buying massive positions in the gold sector.
Lassonde is arguably the greatest company builder in the history of the mining sector. He is past president of Newmont Mining, former chairman of the World Gold Council and current chairman of Franco Nevada. Lassonde is one of the wealthiest, most respected individuals in the gold world, and as always King World News would like to thank him for sharing his wisdom with our global readers during this critical period in these markets.
The Reemergence Of The Gold Bull
Eric King: “Pierre, this long, cyclical bear phase inside of the secular bull market in gold has frustrated a lot of bulls. This bear phase has lasted longer than the mid-cycle correction in the 1970s, and we’ve seen some of the greats like Frank Giustra, who believed the bear phase ended some time ago, make significants bets in the sectors. But it’s not really that abnormal for the great ones to aggressively position themselves a bit ahead of the final lows. Your thoughts on where gold is headed from here.”
Pierre Lassonde: “I became more positive in September, and I really believed that we had seen the lows. I did not give more than a 5 percent chance that gold was going to break $1,120 – $1,130, and yet it has…
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Pierre Lassonde continues: “The absolute evidence of the market is that the U.S. dollar is still ‘King.’ And as long as the U.S. dollar continues its bullish run against all other currencies, gold is going to struggle. So we have to see a turnaround in the entire commodity complex in order to see the dollar finally start to roll over, but that’s not happening yet.
A Turn Will Come For The Gold Bulls
Is that going to happen? Absolutely. The reason for that is because the dollar’s rise is going to reach a point where it creates so much pain for the U.S. economy that the dollar’s run will be forced by the Fed to come to an end. But that’s not today.
So I’m carefully watching key markets such as oil, gold, copper, and the entire commodity complex. And as long dollar continues its bullish run, the gold bulls are fighting a battle they can’t win in the very short-term.
Eric, you have to remember that the 1970s bear market was a very short bear market. It was literally less than two years. It was very abrupt and the gold price dropped 50 percent in a matter of months. So the whole thing was over in less than 24 months. But then gold came back with a vengeance.
So this cyclical bear phase is a very different animal. If you look at copper, for example, let’s not forget that the price was about 62 cents a pound in the late 1980s through the 1990s. When I took over Newmont Mining in 2001, copper was trading at 65 cents a pound, and the price had been there for 15 years. These bearish phases can sometimes last longer than one can remain solvent, so you’ve got to be really careful.
The thing that nobody can perfectly diagnose is how all this money printing by the largest central banks of the world is going to end in terms of producing inflation. Because the Fed has tripled its balance sheet and the Japanese are doing the same thing. If you look around the world at the amount of money that’s been created — the numbers should be reserved for space exploration because it’s in the stratosphere. (Laughter).
Super-Wealthy Accumulating Massive Positions In Mining Companies
But there are some great companies out there that I am buying a bit more of. The valuations are already silly and every time they dip down I buy more. Some of the smartest money — private equity and the super-wealthy — that’s what they are also doing. They are picking the companies that have solid assets and great management, and as the public dumps the shares at ridiculous valuations, they say, ‘Great, give us more shares.’
A very wealthy African family just bought a 10 percent stake in a company, with more to come because the valuations are so absurd. So the super-wealthy are willing to put $20 million – $40 million into some of these high-quality companies (as they patiently anticipate a reemergence of the gold bull). That’s what is happening right now but people are not seeing this on the tape because these massive positions are being accumulated very quietly.” King World News note: Despite the mainstream media’s seemingly endless anti-gold propaganda, I wanted to thank my good friend, Pierre Lassonde, for letting KWN readers around the world know what is really happening behind the scenes in the gold sector. The bottom line is that big money is beginning to aggressively enter the gold market and that is how major bottoms are made.
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