Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
By Collin Kettell on January 12, 2018
Frank discusses gold and Hive Blockchain, a company where he is chairman. They have partnered with Genesis. Hive is a cryptocurrency mining and investing company. He became interested in the space when found out that the CEO of Fidelity a company with two trillion in funds has been discussing bitcoin. He says, “Something big is happening.” Hive made far more than they anticipated in the first quarter of operations. They raised 175 million, and they expect to do 300 million in revenue this year. It makes sense to utilize cheap electricity wherever it is available to mine bitcoin.
Several companies have invested in Coinbase the cryptocurrency exchange, and they now have a valuation of nearly 1.3 billion and 13 million customers. This is amazing growth.
He feels gold did spectacularly well last year and it has been an incredible asset play. What has been disruptive is the amount of money flowing into ETF’s, this caused concentration and these ETF’s were required to dump many stocks. This hurt the junior space, and it still hasn’t recovered.
Inflation doesn’t appear to be correctly calculated and indeed, most companies recognize this fact. He recommends a book called the “Wisdom of Crowds.” Gold and interest rates are rising, but they are not fast enough to deal with inflation.
The mining supply side has been restricted by environmental rules, and we now have a twenty-year cycle from discovery to production. Quality gold and copper stocks are going to trade upwards. With gold, If your not long you will be wrong.
Frank discusses Metcalfe’s law and how it applies to bitcoin.
Talking Points From This Week’s Episode
• Much of the money in cryptocurrencies is not leveraged; thus large crashes are less likely.
• Mining juniors are still experiencing the pain from the ETF’s liquidating many stocks.
• Inflation is underestimated and with Fed rates this low people are taking hidden losses.
• You need a libertarian mindset to avoid the media distortion.
• He is bullish on global growth.
Frank Holmes is the CEO and chief investment officer of U.S. Global Investors. He is chairman of Hive Blockchain. Mr. Holmes purchased a controlling interest in U.S. Global Investors in 1989 and became the firm’s chief investment officer in 1999. In 2006, Mr. Holmes was selected mining fund manager of the year by the Mining Journal. He is also the co-author of The Goldwatcher: Demystifying Gold Investing. More than 30,000 subscribers follow his weekly commentary in the award-winning Investor Alert newsletter which is read in over 180 countries.
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