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.
Frank discusses the gold and bond markets and how they have been driven by global uncertainty. Bond rates have begun to decline again which is bullish for the gold market. He talks about forward looking industrial indicators which are currently positive and how they are predictive of future global economic demand. Holmes says this is a good sign, and may be the underlying reason why commodities have been rallying.
Gold miners have regained control of their cost structures and are now profitable again. Miners this year will likely outperform gold. Any further rallies between now and this summer in gold could result in a 30% to 40% move higher in mining stocks. Frank feels the upcoming Chinese holidays will likely push the gold price down in the near term- which could be a buying opportunity.
The uranium price may surge in the near future, as uranium tends to lag natural gas and oil commodities. The fiscal policy changes in the United States under Trump appear bullish for the resource sector, and the promises to remove regulations could be of huge benefit to US growth and innovation.
He discusses the economic changes in India, and how Argentina’s new leader is pro America, trade, and global investment. The economy and land values in Argentina are improving. The government is doing everything they can to attract business, and mining companies are getting interested. Frank also touches on portfolio holdings, what percentages you may want to have in bullion, stocks and mid-caps, along with various quality gold stock picks.
Talking Points From This Week’s Episode:
• The fear trade and negative interest rates in bonds are driving the gold market
• Gold miners have improved their cost structures and are now profitable at these levels
• Uranium and resource commodities could improve under a Trump presidency
• Portfolio weightings and stock picks are discussed
Frank Holmes is the CEO and chief investment officer of U.S. Global Investors. 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.
