The decline in gold prices and the pronounced bearish sentiment have had a strong impact on the mining sector. However, according to one market analyst, now is the best time for investors to find long-term value.
Michael Gentile, director and strategic adviser at Radisson Mining Resources, said sentiment in the junior mining sector is worse than it was in 2015, when valuations fell to historic lows. But he added that this is when investors want to enter the market.
Although gold and silver prices may still decline, Gentile is confident that the precious metals market is bottoming out, so in the next three to five years, the gold market is poised for significant growth.
He also noted that rising US interest rates, which have pushed the dollar to a 20-year high, are starting to push the global economy to a breaking point as major economies are forced to interview their domestic currency and bond markets.
"I think the UK intervention was an important signal for the market," he said. "If we don't get closer to the end of the Fed's rate hike cycle, then we could see the end of the tunnel, and that's positive for gold."
As for what investors should look for in the mining sector, Gentile said he is looking for companies with good funding and projects.