Tiho Brkan Comments on Precious Metals

Tiho Brkan is a Hong Kong based fund manager and the author of ShortSideOfLong.com. He is an expert at market analysis and a huge proponent of precious metals and commodity speculation…
Tiho starts off by discussing the Commitment of Traders Report (COT), which shows a recent build up of shorts in the commodities, especially in the silver market. This leads Tiho to believe that there is a major short squeeze in place that has driven the price of gold, silver, and other commodities up over the past week. However, Tiho is not convinced that the bottom in is for the precious metals.

In many cases, Tiho points out that the junior miners and explorers are down as much as 90%, while gold has corrected by about 35%. Those numbers, mixed with a historical analysis gives Tiho reason to believe that more downside could be in store.

Silver is by far the largest holding that Tiho holds in his fund. In fact, Tiho holds up to 85% of his fund just in silver. He believes that silver is undervalued on a historical basis, especially when looked at in terms relative to gold. Firstly in inflation adjusted terms, silver has not reached its previous highs from the past bull market 30 years ago. Additionally, the recent bear market in precious metals has been far more harsh to silver. While gold is down 35%, silver is down over 65%. 

Tiho discusses the recent move in the gold miners, which has been quite strong. Investors are witnessing substantial moves on huge volumes. While Tiho does not own any shares, he does believe that the gold stocks could be leading the metals out of the bottom. 

What catalyst needs to occur for the precious metals to resume their bull market? Tiho points out that commodities typically lead inflation. When gold and silver move up, that is when inflation will be seen and it will be too late for speculators to invest in gold and silver. 

Other commodities that interest Tiho? Sugar. Sentiment is extremely negative right now for the commodity, and Tiho believes that a rise in the price of sugar is imminent. Prices are so low that farmers are starting to back out of sugar production and this will ultimately drive the price up. If investors are looking to speculate on sugar, Tiho advises against investing in companies that are directly involved in the sugar business. Rather, Tiho uses ETFs, futures, and options. 

In this interview, Tiho also discusses the S&P 500 and US equity markets. He looks at the negative correlation that has been in place between these markets and the precious metals. 

Listeners can visit ShortSideOfLong.com to read Tiho’s analysis on worldwide markets and the commodities.