by Zig Lambo
The Gold Report
While the markets have been on edge for the past year or so and have left most investors bewildered as to what to do next, portfolio manager and author John Stephenson thinks that the course is set for higher gold prices. In this exclusive interview with The Gold Report, Stephenson explains why he thinks we will avoid a worldwide economic crash and how the continuing QEs and foreign government bailouts will push more investors into the gold and mining share markets as gold moves above $2,000/ounce. He also talks about some of his favorite gold mining names that should be good vehicles to profit from this move.
The Gold Report: Since you last spoke with The Gold Report in January, we’ve had a seemingly self-feeding cycle of expectations, plans, bailouts, lack of results and back-to-the-drawing-board. Do you see any ultimate resolution to the world’s economic dilemma, or will we somehow just muddle through, or have to go through an actual crash of some sort?
John Stephenson: I think we’ll basically muddle through from here. We’ve had several important developments over the last few weeks. The Federal Reserve’s Quantitative Easing 3 (QE3) $40 billion program targeting mainly mortgage securities has the potential to move the needle. There was a big rally to risk assets when that was announced but that has faded somewhat. The other huge thing is the announcement by European Central Bank (ECB) President Mario Draghi that he would defend the euro at all costs. Later he talked about a bailout plan called the Outright Monetary Transactions (OMT) program that would involve unlimited purchases of sovereign debt for up to three years. The devil is in the details and it may not get implemented in the way the market interpreted it, but nonetheless, that was very positive.