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William Hanley Financial Post
Published: Saturday March 25th 2006
This, Bob Hoye says, looking happily around Il Giardino's small dining room and bar off the main entrance lobby, is one of his favourite places, a bit of Tuscany set down
here in the West End by restaurateur Umberto Menghi, with tile and wooden beams, and a cheery fireplace to warm us on a blustery day. "Listen to that," he adds, smiling. "Sinatra on the sound system. I really like it here."
There's
another place the chief investment strategist of Institutional Advisors really likes to be now, and that's in the gold market -- especially junior exploration companies. Hoye, a technical analyst, market historian and oft-cheery gloomster, who
never shies away from taking contrarian positions and giving central bankers hell, reckons gold is in a position to keep glittering.
"Every post-bubble contraction has been accompanied by a long bull market for gold," he says. "I think
the real price of gold is going to continue up for a year or more ... and history suggests the price could get to US$1,000 in three or four years."
Gold is about US$555 an ounce now -- up from a low near US$252 around 2000, and still
below the more than US$800 it reached briefly in 1980. So the possibility of US$1,000 might prove a grand outcome for the institutions and high-net worth individuals who buy Hoye's advice.
First, lunch. We both order the saute of
assorted mushrooms in roasted garlic, the Tuscans being mad for mushrooms. For his main course, Hoye has the prawns Provencale, which is grilled jumbo prawns on a bed of rice with a mix of roasted vegetables. Lunch Money, in a Tuscan frame of
mind, goes for a simple pasta -- penne with roasted eggplant.
Hoye is not just in a historian frame of mind when it comes to gold. He was a mining analyst for many years and has been involved in the field for about 40 years, from the
hurly-burly old days on Howe Street to today's entrepreneurial explorers, although he no longer has any official ties to junior companies.
"Exploration power is in the hands of exploration companies," he says, explaining that the big
producing companies gradually withdrew from widespread exploring for gold during the 20-year bear market. "Think of the small-cap techs in 1994-95. That's where we are for gold exploration now. You've got really good field talent at work. The
understanding of gold deposits now, compared with 30 years ago, is like night and day. These guys really know what to look for, how to find it and how to go at it when you've got it."
One way the investor can go at it is to buy a basket
of junior explorers, Hoye says. Which is what he does. Some of the penny stocks become dollar or multi-dollar stocks and, of course, some stay in the pennies. That's why it's important to have a basket of stocks.
"It may seem strange
and it's a very illiquid market. But if people can handle the lack of liquidity, they should be in a portfolio of exploration stocks or buying a gold fund. A huge bull market for gold and gold exploration stocks wouldn't be anything new.
They've followed previous big financial bubbles. The senior golds did well after the Crash of '29."
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