June 21st was a good day for gold.
Gold rose to a 5-year high.
The largest gold focused Exchange Traded Fund (GLD) saw its largest ever inflow of capital.
All of a sudden we saw a rush of news stories announcing the dawn of a new gold bull market.
A webinar on gold investment opportunities I ran was oversubscribed. Featuring three leading gold fund managers, Angelos Damaskos, Chief Executive Officer, Sector Investment Managers, Keith Watson, Portfolio Manager, CQS and Ian Williams, Chairman, Chief Executive, Charteris, we had a wide ranging discussion on where the gold markets were heading. If you’d like to listen to the webinar please click here.
Recently, I was chatting to Ronald-Peter Stoeferle, CMT, Research & Investment Funds, Incrementum AG, one of our key notes at this year’s Mines and Money London. He is the author of one of the most widely read gold reports, in Gold We Trust. Speaking to Ronald, he anticipates that gold may rise to US$1500 by the end of the year.
But does gold’s new high translate into good news for mining companies?
The short answer is yes. However, like all good things in life, the benefits will come to those who wait.
I think the answer is we’ll see a trickle-down effect.
We’ve already seen an influx of institutional money into gold ETFs. Next I expect to see investors increase their allocation to the big gold royalty and streaming companies such as Franco Nevada, Wheaton Precious and Royal Gold. I like royalty and streaming companies as an investment strategy – the business model is straightforward as well as being a good way to diversify risk.
Next up I think we’ll see an increase in investment interest (and share price) of the majors and mid-tiers. We confirmed Peter Marrone, Executive Chairman of Yamana Gold and Bob Vassie, Chief Executive Officer, St. Barbara Gold and John Welborn, CEO, Resolute Mining as keynotes for Mines and Money London last week. I’m confident that their share prices will be much higher by the time the event comes around in November.
Last but by no means least, we’ll see investors increase their allocation to good quality juniors: Aurania Resources, Auryn Resources, Barsele Minerals, Cabral Gold, Merdeka Copper Gold, Panthera Resources – I’ve put all of these companies on my watch list. They’ll all be at Mines and Money London this November.
Is this the start of a bull run?
I think it is. We haven’t had a global recession since 2008. Markets are getting jittery, compounded by tense US-China relations. We all know that in times of economic uncertainty gold becomes a safe haven.
The World Gold Council sums it up best on their website:
“Gold is a unique asset: highly liquid, yet scarce; it’s a luxury good as much as an investment. Gold is no one’s liability and carries no counterparty risk. As such, it can play a fundamental role in an investment portfolio.
Gold acts as a diversifier and a vehicle to mitigate losses in times of market stress. It can serve as a hedge against inflation and currency risk.”
With institutional investors coming back to gold, shouldn’t you be too?
Hear more about gold price trends at Mines and Money London, 25-27 November 2019, taking place at the Business Design Centre.