Shree Kargutkar: Gold and Silver Price Drivers, Major Opportunity for Stocks

Shree Kargutkar: Gold and Silver Price Drivers, Major Opportunity for Stocks

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It’s hard to predict where precious metal prices could go in 2022, but their key drivers can provide clues.

Speaking to Investing News Network, Shree Kargutkar, managing director and portfolio manager at Sprott Asset Management, said he believes the most important factor for the price of gold this year will be investor demand.

He noted that while investor demand hit an all-time high in 2020, it weakened in 2021 despite factors including negative real rates, higher inflation and growing deficits around the world.

Meanwhile, physical demand for gold from major buyers China and India was weak in 2020 and the first half of 2021, but rebounded strongly in the second half of last year.

Kargutkar noted that gold should see positive price action if both types of demand do well in 2022. “If physical buyers are buying and investors are coming back into the space, that should create some magic as far as gold prices are concerned,” he explained during the conversation.

Regarding silver, which has both industrial and investment uses, Kargutkar said that while demand for the white metal has always been skewed towards the industrial side, investor demand is crucial for prices.

“What I think will be the key determinant in 2022 will be the emphasis that institutional investors, as well as large retail investors, start paying for silver exchange-traded funds (ETFs), and whether they actually allocate silver in either ETFs or bullion funds or in the physical metal outright,” he explained. “I think that’s going to be the biggest driver when it comes to the price of silver.”

Kargutkar also spoke of the “generational opportunity” he currently sees in precious metals stocks, saying he favors mid-sized and smaller producers, as well as high-impact exploration companies.

Watch the interview above for more of his thoughts on precious metals.

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Securities Disclosure: I, Charlotte McLeod, have no direct investment interests in any of the companies mentioned in this article.

Editorial Disclosure: JInvesting News Network does not guarantee the accuracy or completeness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the views of Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.