Sprott Inc. precious metals fund manager Charles Oliver still believes gold is going to $2,000, and soon, but he’s not willing to double down on his losing bet that the metal is headed higher just yet.
After all, he’s just getting used to the cost of losing that wager: the disappearance of his flowing locks.
Mr. Oliver told investors four years ago that if gold wasn’t at $2,000 (U.S.) an ounce by this time, he would shave his head. And so he did, making a trip Friday to a chi-chi Toronto barber to be shorn, with camera crews in attendance to record the occasion.
Still, Mr. Oliver doesn’t think that he is off by much. He believes gold could hit the $2,000-an-ounce level in 2012, as investors realize that indebted countries are not going to be able to easily get their red ink under control, and as central banks continue to print money.
For the moment, gold has been a painful place to be. As gold bullion has hovered in the $1,600-range, gold stocks have suffered from the loss of momentum. For those with a lot of gold equities, the haircut in their portfolios has been a lot like what Mr. Oliver just got – sudden and drastic.
Mr. Oliver nonetheless believes that there’s upside in gold stocks, perhaps more so than in the bullion itself. Earnings multiples on producers like Barrick Gold Corp. have collapsed, and if they move at all upward toward historical levels, there is big expansion in stock prices to come.
Mr. Oliver would also like to see a company like Barrick increase its dividend greatly, to draw a little attention to the sector and the cash flow produced by big gold miners.
Meanwhile, his head-shaving escapade is paying big dividends for charity.
He has asked friends and colleagues in the gold business, who have all benefited from the rise in bullion, to support him by donating to a fund for World Vision Canada, CARE Canada, UNICEF Canada and the Terry Fox Foundation. He wrote the first cheque, giving $100,000, and he has so far raised more than $1-million. The charities were chosen because of their focus on children, often in areas where gold mining is active.
“It’s a way to give back,” he said.
The donation website is here.