Real Gold Explorers Take No Prisoners Says Thibaut Lepouttre

Gold-tracker Thibaut Lepouttre treks the world hunting for solid gold mines and companies with the guts to dig for riches. The editor of Caesars Report and Sprout Money tells The Gold Report why the price of gold is moving sideways for the moment. Don't be fooled by cowardly gold bears, says Lepouttre; invest in muddy, muscled, bull-headed explorers with noses tuned to sniffing out the purest form of value.


Stuart Monk/

The Gold Report: In an interview with The Gold Report in April, you predicted that gold will continue to trade "sideways" between $1,200 and $1,410 an ounce ($1,410/oz). That is exactly what happened! Why?

Thibaut Lepouttre: The problem was the lack of catalysts. Nobody was really worried about war in Ukraine, or the Federal Reserve's reduction of quantitative easing (QE). When the market is not at risk of collapsing, gold's appeal as a safe-haven investment fades. And with no inflation on the horizon, gold sours as a hedge against rising prices.

TGR: Is the drop in the price of oil affecting gold?

"Once gold is attractive again,Almaden Minerals Ltd.'s Tuligtic will be in the spotlight."

TL: Gold mining companies that depend on diesel generated power stations can benefit from a falling oil price, but there is no real direct correlation between the price of oil and the price of gold anymore.

TGR: Why did gold drop in October and November?

TL: Some people point at the Fed's decision to reduce quantitative easing, but that is bogus thinking. The gold price did not start to slide until 36 hours after the Fed's decision. I am not a conspiracy theorist, but the temporary drop could have been an orchestrated move to make the weak hands sell. Just a few weeks later, we were back up above the support level of $1,180/oz.

TGR: When you say orchestrated move, who would you be pointing at?

TL: The country that was positioned to benefit the most from a falling gold price was China. Not long ago, a person who works for one of China's biggest gold companies said that when gold trades below $1,150/oz after QE ends, there will be M&A activity from the Chinese in the gold market. What did we see? We saw the quantitative easing program with the Federal Reserve stop and gold slid to $1,150/oz. Go figure.

"One does not often encounter such a valuable phosphate deposit as Focus Ventures Ltd.'sBayovar in the world today."

TGR: Where is the gold price headed in 2015?

TL: The two main gold price drivers are inflation and market panic. Right now, investors are falling over themselves to buy stock. The European Central Bank and the Bank of Japan are pumping ridiculous amounts of money into the financial system. The main issue is the velocity of money, which is currently at a multidecade low. The higher the velocity of money, the higher the inflation rate if the money supply decreases at a slower rate.

The real problem here is that the money supply is increasing, but because the velocity of money is decreasing, no inflation is being created. When the velocity of money returns to the average velocity of the past 30–40 years, the inflation targets proposed by the European and Japanese central banks will be underwater. We are all walking on thin ice with monetary policy.

TGR: Do you have a timeframe on the ice cracking?

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Disclosure: Peter Byrne conducted this interview for Streetwise Reports LLC, publisher ...

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