What sparked your interest in gold?
André Dubuque: The catalyst is the context in which we are living with the epidemic. We wonder what will happen next. Governments borrow incredible amounts of money with central banks – in the case of Canada, it is the Bank of Canada that invests $ 4 billion a week in the economy. The idea is to print money and keep interest rates at zero. I’ve been following economics for 20 years and never in economics lessons have seen printing money an exit. The other thing is, everything is very expensive. Stocks are expensive, bonds are expensive. We fear inflation will happen. What do you do in such a context? Portfolio managers don’t really talk about precious metals. So we thought it was worth reminding people that gold is heritage insurance.
Francois Riverin: I’ve always been interested in gold. It’s a great market, and there’s a lot of traffic. There are some serious courses out there, but roughly speaking, it appears to be a good long-term investment, as history tells us. There is a dearth of books on this topic in Quebec and La Francophonie in general, which is why we started.
What indicators are you looking to see if your gold bet is right?
André Dubuque: The three factors that make us say that gold will rise in the coming years are the weakness of the US dollar, government debt and inflation expectations. As for the US dollar, there is an erosion in its value that appears to want to continue. In nearly 20 years it is down 20% compared to the basket of coins. As for the United States’ trade balance, this is definitely a trend in their favor. As for inflation, official figures say it is low, and we are looking at that carefully. We also look at the money supply in circulation, which is at a level seldom seen in recent history and which is believed to be a harbinger of upcoming inflation. We’ll see what comes from it.
Should you buy physical gold? Or get an ETF that tracks the value of gold?
André Dubuque: Both options have their advantages and disadvantages. The advantage of buying physical gold is that you have it. If you need to, don’t wait for your email to be answered. But people may not want to rent a safe from the bank. This is where Exchange Traded Funds (ETFs) have their advantages. For example, if you buy shares in the iShares Gold Bullion (CGL) fund, it plays the role of insuring the assets. Some books swear by physical gold, but we, since we’re not a supporter of Armageddon Tomorrow morning, also suggest FNB, which eliminates security, storage, and transaction fees. Important physical gold, etc.
Francois Riverin: If the disaster scenario does not materialize, the stock market has not really collapsed, you may have put in 2 to 5% of the gold and you will not be a loser, the rest of your portfolio will be appreciated. It’s as if you are buying home insurance and not getting on fire, it is better not to go through with fire.
How are your recommendations received around you?
André Dubuque: With Mister or Mrs. Tout-le-Monde, there is great curiosity. Even at the youth level, in their early twenties, they are very extroverted. If there is no really adequate reception, it’s with investment professionals. For them, gold is outdated, and it is a mineral found in the earth, and we extract it to hide it … On the other hand, some of them, particularly economist Clement Gignac, of the Industrial Alliance, have taken into account in their assumptions that the price of gold could boom.
Francois Riverin: Gold Producers in Time. They canceled a portion of their debts, and they are increasing their profits. Some of the major gold producers are down 30% from their highs, so it’s interesting. Having said that, you have to be honest, you have to be humble, and no one is able to predict the future.
By the numbers
2,500 years old
The number of years the gold has been used as a currency
That’s the weight of minerals and mining stocks in the S & P / TSX Composite Index in 2020, according to Bloomberg News. Eight of the twelve stocks that have been selected to join the S & P / TSX Composite Index since June 2020 are precious metal miners.
Invest in gold
André Dubuque and François Riverine
Jay San Jean Editor
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