Exclusive Interview: Brien Lundin Has Some Advice for Gold Investors

Equities Editors Desk |

investing in gold, how to invest in gold, best junior gold companies, federal reserve gold

The 40th annual New Orleans Investment Conference is set to kick off this week from Oct. 22-25, 2014 at the Hilton New Orleans Riverside. As it does each year for the last four decades, the conference will serve as a gathering of some of the most prominent leaders and influential minds in the economic, political and investment arena to discuss the current landscape for investors.

This year’s speakers include Alan Greenspan, former Chairman of the Federal Reserve; Pulitzer prize winning political commentator Charles Krauthammer; Doug Casey of Casey Research, and many more.

equities.com spoke with Brien Lundin, Editor of Gold Newsletter and CEO of the New Orleans Investment Conference to learn more about this year’s exciting event.

EQ: The 2014 annual New Orleans Investment Conference marks the 40th anniversary for the event. It’s a preeminent conference attended by metals and mining investors from all over the country, and this year promises to be the biggest in its history. What can attendees expect at this year’s conference?

Lundin: Over the last 40 years, the New Orleans Investment Conference has been there for investors for all kinds of market turmoil, uncertainty and crosswinds in the investment markets. But rarely before have we ever seen so many different compelling and worrisome developments, and so much volatility all coming together at one point in time.

Over those 40 years, whenever we’ve had anything approaching this level of uncertainty in the markets, investors who’ve come to the conference have found tips and strategies that have yielded fortunes over the weeks and months following.

That’s really where this conference shines. We get the best experts out there; the most insightful contrarian thinkers and combine them with really maverick individual investors who have been very successful in their own right. Great ideas flow from that. These are people who see the world at a slightly different angle than the consensus, and they see these opportunities before they take off. That’s been the real benefit of the New Orleans Conference and what it’s been known for throughout the years.

EQ: The headline speakers that you have for this year’s event is impressive to say the least. You have Alan Greenspan, Charles Krauthammer, Doug Casey, Rick Rule, and the list goes on and on. What are some discussion topics that you’re excited about?

Lundin: I’m really hopeful for Alan Greenspan’s presentations. We have two sessions with Dr. Greenspan this year, including a moderated standalone Q&A with the audience. We’ve collected some submitted questions over the past few weeks and will also do so during the conference. I’m very curious to peek behind the curtain into the inner workings of the Federal Reserve and the U.S. government.

It’s become pretty obvious that the Federal Reserve is involved in every asset class and investment market, at least from the standpoint of determining the price of money, which then affects all the other markets. Beyond that, there’s even been some direct intervention into equities and gold. We’re really going to keep at Dr. Greenspan to try and get some answers into how the Federal Reserve works behind the scenes, what its goals are, and what his views are on how and if the Fed can extricate itself from this easily money, zero-interest rate policy in quantitative easing.

EQ: What are your thoughts on the Fed’s impact on gold and the companies in the space since the tapering began?

Lundin: It’s been a real balancing act. The equities market initially weakened when it realized that QE was coming to an end, but then we got some positive economic news, indicating a buoyant U.S. economy when the rest of the world seems to be going in the other direction. That really helped propel the U.S. equities markets and alleviate the pain of the withdrawal of QE.

But as we saw in the past few weeks, it’s really precariously balanced on the sentiment of an improving economy. If there’s any sign that the U.S. economy is staggering or slowing just a bit, then the bottom falls out of the equities markets because it’s all held up by the promise of either an improving U.S. economy or quantitative easing. So if you take both of those boxes out from under it, it’s going to fall.

Conversely, with an improving economy we had a stronger dollar, which was almost parabolic for a period of weeks. That helped to drive gold down temporarily. Now that the dollar has gotten overbought, the bloom’s come off that rose a bit. We’ve seen that gold’s fall was halted at the same strong floor of around $1180, and now it’s rising once again.

There’s also a few untold stories there that we’ll explore at the conference, primarily Chinese buying is really unrecognized by the broader market. A lot of these factors are coming together now to make it apparent that even if we don’t have the big rally in the metals, they are trending upward now and we’re caught in a recovery mode. The prospects are much brighter for the metals and mining stocks than just a month or two ago.

EQ: Gold has been trading in that range of about $1180 and $1400 for a prolonged period. It’s toward the low end of that range right now, but do you think there are any catalysts that will help it break out to the upside in the intermediate term?

Lundin: Any indication that the U.S. economy is slowing and that the Federal Reserve will halt its taper or re-instigate quantitative easing will set the gold market afire. I don’t think that’s going to happen over the next few months, but it could happen in the spring.

Other than that, it’s kind of a slow-and-steady climb for the metals. We’re going to continue to see Asian demand and not going to continue to see the type of Western selling that we saw in 2013. Those two combined will present a supply and demand story for gold and silver that I think will take the metals higher in a slow-but-sure fashion if there are not any exogenous events to really light a fire in the market.

EQ: As it pertains to the actual companies, such as explorers, miners, etc. How would you suggest investors approach this market right now given the environment over the past few years? Does it present an opportunity for investors to find bargains?

Lundin: Absolutely. There are some companies out there that have major world-class deposits in various metals and minerals. In some cases there are identified deposits with early economics that you know are going to work and you know the companies have a world-class resource. Yet, they’re selling at a fraction of what they should be in a normal market. Some of these companies are trading at a fraction of where they were just a year or two ago.

So I would focus on these kinds of low-risk speculations where you have an identified resource and where it’s hard to get hurt over the long term. The upside is similar to what you would have with the grassroots exploration play in a better market.

EQ: The conference will provide attendees with a great opportunity to meet the management teams of some of these kinds of companies. What is some advice you can give investors when speaking with these companies and members of their management?

Lundin: One of the things we do at the conference is have exhibit hall tours where newsletter writers will lead a tour of five to 10 companies during one of our breaks. They’ll ask questions and get the stories in a succinct manner for each company. So you hear their plans and what they want to happen. But over the years, one of the most important questions that I think an investor can present to these junior companies is what happens if their plans don’t work out? What is their fallback position?

That really puts management teams on the spot, and a good management team will have a ready answer for that. An inexperienced management team will stammer and stutter and won’t have a clear answer. Good management will have a fallback position for every one of their plans going forward. I think that’s a key question.

For more information on the 40th annual New Orleans Investment Conference, visit their website here.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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