Posted on February 28, 2021 at 7:00 a.m.
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What sparked your interest in gold?
André Dubuc: The trigger is the context in which we live with the pandemic. We wonder what will happen after that. Governments are borrowing incredible amounts of money together with central banks – in Canada’s case, it is the Bank of Canada, which puts $ 4 billion a week into the economy. The idea is to print money and keep interest rates at zero. I have been following economics for 20 years and I have never seen in my economics classes that printing money is a way out. The other thing is that everything is expensive. Stocks are expensive, bonds are very expensive. We are afraid that inflation will set in. What to 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.
François Riverin: I have always been interested in gold. It’s a fascinating market, there is a lot of action. There are some serious cycles, but roughly speaking, over the long term, it looks like a good investment, history tells us. There is a scarcity of books on the subject in Quebec and in the Francophonie in general, and that prompted us to get started.
What indicators are you looking to see if your gold bet is correct?
André Dubuc: The three factors that make us say that gold will appreciate 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 of its value which seems to want to continue; for almost 20 years, it has fallen by 20% compared to a basket of currencies. For the United States’ trade balance, this is certainly a trend that is in their interest. For inflation, the official figures say it is low, we are looking at that carefully. We also look at the money supply in circulation, which is at a level rarely seen in recent history and which is believed to be a harbinger of inflation to come. We’ll see what comes of it.
PHOTO MARCO CAMPANOZZI, THE PRESS
André Dubuc, journalist at Press
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Should you buy physical gold? Or get an ETF that tracks the value of gold?
André Dubuc: Both options have advantages and disadvantages. The advantage of buying physical gold is that it is in your possession. If you need to, you don’t have to wait for your email to be answered. But people may not want to rent a safe from the bank. This is where the exchange traded fund (ETF) has its advantages. For example, if you buy shares in the iShares Gold Bullion (CGL) fund, it plays the role of asset insurance. Some books swear by physical gold, but we, as we are not supporters of Armageddon tomorrow morning, also suggest the FNB, which eliminates the problems of security, storage, transaction fees. important physical gold, etc.
François Riverin: If ever the disaster scenario does not materialize, the stock market does not really crash, you may have put 2 to 5% in gold and you will not be a loser, the rest of your portfolio will ‘to be appreciated. It’s like when you buy home insurance and you don’t go through the fire, basically you’re better off not going through the fire.
PHOTO GIMMY DESBIENS, THE EVERYDAY
François Riverin, expert in mining and gold mining
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How are your recommendations received around you?
André Dubuc: With Mr. or Mrs. Tout-le-Monde, there is a great curiosity. Even at the younger level, in their early twenties, they are very open. Where there is not really a favorable reception, it is with the investment specialists. For them, gold is outdated, it is a metal that is in the earth, and we unearth it and then hide it… On the other hand, some of them, in particular the economist Clément Gignac, of Industrial Alliance, take into account in their assumptions that the price of gold could experience a surge.
François Riverin: Gold producers are in a good time. They have eliminated part of their debt, they are increasing dividends. Some of the big 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, no one is able to predict the future.
In numbers
2500 years
Number of years gold has been used as currency
14 %
That’s the weight of metals and mining stocks in the S & P / TSX Composite Index in 2020, according to Bloomberg News. Eight of the twelve stocks selected to join the S & P / TSX Composite Index since June 2020 are precious metal miners.
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PHOTO PROVIDED BY GUY SAINT-JEAN
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Invest in gold
André Dubuc and François Riverin
Guy Saint-Jean Editor
231 pages
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