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.
Ali discusses how people compare the current financial situation to those of the past, however the big picture is usually different, as the underlying economic circumstances have changed. The US has real competitors unlike the 1950’s and the demographics are radically shifting. The US deficit will continue to grow in part due to baby boomer retirements, their pensions and health care.
Watch Interview with Ali Zamani
Ali says that you usually get hyperinflation from a big FX trade, that’s how the Ruble inflated with Russia in the 1980’s. To get high inflation in the US FX traders have to be buying something else, and there really isn’t much else to buy. All of the other currencies are too small to absorb the US dollar.
He thinks that worldwide deficits and negative interest rates will continue to grow. The decline of the US Dollar will be a lengthy process. Eventually negative rates will affect people’s purchasing power and savings, then they will seek alternatives.
He sees inflation in the wage sector, at 10% year over year, but thinks the Fed can handle it for now. If they raise interest rates a quarter point they can absorb a considerable amount of it and transfer 50 billion to the yield curve. They would like interest rates at 2-3 percent, and this will result in trillion dollar deficits.
He thinks gold is by far the best investment and is cheap by any measure. The entire industry has been destroyed on the funding side and is struggling to finance and maintain projects. He expects a healthy gradual long slow base to form in gold.
Ali discusses what to look for in gold mining companies. He has interests in Source Exploration a Canadian Company with operations in Mexico.
Talking Points From This Week’s Episode:
• US demographics are changing, pensions and health care costs will increase deficits.
• Fed is currently more than capable of managing inflation with changes in interest rates.
• What to watch for in mining companies and why gold is a good buy.
• Expects to see more negative interest rates and further bond buying by central banks.
Mr. Ali Zamani has been the Managing Partner of Overlook Investments LLC since January 2016. Mr. Zamani is a Partner – Public Securities at Gefinor Capital Management, Inc. He was a Partner – Public Securities at Gefinor Capital and Portfolion Manager. He was a Principal at SLZ Capital Management from July 2012 to December 2013. From 2004 to 2012, he was a Portfolio Manager at Goldman Sachs Principal Strategies. While at Goldman Sachs, he managed a portfolio focused on the energy, materials, utilities and industrials sectors. Mr. Zamani was responsible for a $200-$400mm portfolio of equity and credit investments for Goldman Sachs Investment Partners. His portfolio focused primarily on energy, utilities, basic materials, retail and industrial equities and credits and cross-sector special situation opportunities. Mr. Zamani holds a B.S. in Economics with concentration in Finance from the Wharton School at the University of Pennsylvania, where he graduated magna cum laude.
