Ned Schmidt: Bear Market in Gold Is Over

Thu, Mar 6, 2014 - 4:17pm

After more than two years of declines, commodity expert and financial veteran Ned Schmidt tells Financial Sense Newshour that the “bear market in gold is over.”

“We had a double bottom in gold last year. We had a double bottom in silver. We had a double bottom in the mining stocks. I think you have to believe that this is the real thing,” said Schmidt.

On the subject of where gold goes from here, Schmidt tells investors to be realistic and not expect gold to get back to its 2011 highs any time this year. “You’re not going to see $1900 at Christmas,” he said. “If we get $1550...I’d be happy.”

When asked whether he would be a greater buyer of gold or gold stocks, Schmidt says that he prefers gold due to the risk of many poor company fundamentals, telling investors looking to buy stocks to diversify their risk by focusing on popular gold mining ETFs like GDX, which is comprised of larger gold miners, or GDXJ, which is heavily weighted towards smaller mining companies.

In terms of the overall commodity space, Schmidt says that 2014 is shaping up to be a pretty good year.

“Demand has been incredibly strong” in the ag-sector, he said. “US exports of grains are up 50% from last year. It’s the old story: If you grow it, they’ll eat it.”

This is partially reflected in the popular agricultural fund DBA, which is up over 15% since the beginning of the year.

What’s causing the spike? In terms of beef prices, which are at record highs, Schmidt says the U.S. cattle herd is at extremely low levels, going back to 1951, due to drought.

California, for example, provides around 50% of all fruits and vegetables to the rest of the U.S. and “has a structural water problem that they refuse to face up to.”

In lieu of some of these problems, Schmidt lists a number of “must own” stocks for Financial Sense Newshour listeners profiting from the rise in commodity and agricultural prices.

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