HardAssetsInvestor.com (HAI): We've recently had a significant pullback in gold, and there are concerns about a gold bubble. What's your short-term outlook for the metal?
Adrian Day, CEO, Adrian Day Asset Management (Day): I tend to be more focused on the long term, generally. I'm a long-term value investor who doesn't mind grinding out the volatility to realize the potential of an investment. But there is a lot of discussion of gold.
Over the short term, I have been concerned about gold for a few reasons. For one, summer is often a seasonally weak period. For two, we obviously had a great run-up in gold in the spring, what with the Greek issues and the European sovereign debt crisis. Gold went substantially above trend and the bullish sentiment rose substantially. There have been lots of reasons to expect a pullback over the summer.
To be honest, I was expecting more of a pullback than we saw. I've been very, very impressed with gold's resilience. When you think about the run we had, to see a pullback from $1,250/ounce to $1,160/ounce really wasn't much of a correction.
I would be cautiously optimistic on gold in the short term. The pullback we saw may well have let a little bit of air out of the market and got the nervous holders out, so we may well be forming a new basis to move up. (more)
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