Bitcoin price loss is gold's gain and that is good for junior explorers too - David Erfle
Once again, the gold market has regained its luster as investors moved back into the precious metal and out of volatile cryptocurrencies. With gold price ending the week above $1,850 an ounce, junior explorers should start to see price movements, according to David Erfle, founder of juniorminerjunky.com.
This week on Kitco Roundtable, Erfle said that the slow start to the year for the gold market was just a consolidation period after hitting all-time highs above $2,000 an ounce. He added that the move back above $1,850 an ounce was a major technical breakout and the price appears to be ready to resume its long-term uptrend.
Efrle added that further volatility in bitcoin will continue to benefit gold prices and the junior explorer sector.
"cryptocurrencies are in a bubble. Bitcoin went from less than a thousand dollars continue to $65,000 in just four years later. When bubbles pop, they usually go down to their fundamental, inherent value," he said. "What is the fundamental value of a Bitcoin? Who knows where this is going to end and how it's going to end, but I think it's going to hurt a lot of people."
With gold prices on the way up, Erfle said that it's only a matter of time before the junior exploration sector starts to regain new bullish momentum.
Erfle added that senior producers are already sitting on a pile of cash and starting to put that money to work. The only difference is that the companies learning from the mistakes of 2011 are doing things right.
Reference: Kitco
Thai
Eng