Roth Capital's Joe Reagor says these companies are flying under investors' radar.
[This article originally appeared on The Gold Report and is republished here with permission.]
Roth Capital's Joe Reagor believes the price of gold will rise as confidence falls in the value of the U.S. dollar. In the meantime, several companies with great assets are struggling to raise financing and are thus considerably undervalued and possible takeover targets. In this interview with The Gold Report, he highlights three juniors and two mid-cap producers that are flying under the radar of investors.
The Gold Report: What's your gold price forecast for the rest of 2015?
Joe Reagor: For the full year, our average price is $1,260 per ounce ($1,260/oz). If the U.S. dollar were to remain steady and not strengthen, gold could reach $1,300/oz by year-end.
TGR: Gold was sold off heavily in the last week of April based on an anticipated interest rate hike by the Federal Reserve. Should the Fed actually raise the rate, how much of a negative effect will that have on gold and for how long?
JR: It is commonly believed that rates will rise because the U.S. economy is improving, but we keep getting mixed signals. The most recent jobless claims were exceptionally good, but the Q1/15 GDP increase was only 0.2%. If we see a stiff rate increase because the Fed thinks the economy is strengthening, that could be bad for gold. Should the Fed choose to raise rates slowly over time, giving it the option to lower rates again if need be, I don't think that's bad for gold.
TGR: Some people believe that a stiff rate hike would spook the market and cause an equities crash. What do you think?
JR: I doubt the Fed would move on that without first providing a cushion to the markets. Should a rate hike spook the market and force the Fed to quickly lower rates again, I think gold would move higher quickly.
TGR: Is it possible an interest rate hike has already been priced in to the price of gold?
JR: The expectation of rate hikes is definitely priced into gold inherently through the strength of the U.S. dollar, as compared to, say, Europe, which has been forced to introduce further quantitative easing.