Photo by: Bloomberg
VANCOUVER (miningweekly.com) – The reason for investors to bet their money on mining stocks is alive and well today, Casey Research chief metals and mining investment strategist Louis James told investors attending the Cambridge House International Vancouver Resource Investment Conference 2015.
He stressed that when price and value diverged, it meant that they would converge again at some point.
“That which is necessary, does not go away, but provides a significant investment opportunity,” he said on Sunday.
The essence of speculation is the difference between price and value, James stated, noting that markets were frequently irrational.
While gold was not the only metal trending lower in recent months, it was down about 40% over three years, and, with the price decline, many gold producers’ equities tumbled to severely undervalued levels.
“The time to buy is when there's blood in the streets," James quoted Baron Rothschild, adding that every investor in the post-Lehman Brothers world was a speculator.
He noted that many investors were wasting time by worrying about conspiracy theories regarding the gold price, about whether multiple governments were in fact manipulating the gold price to keep it low. But that did not matter, he said, noting that governments could neither ever fully control interest rates, nor the price of gold.
“There is only so far a price could be pushed. Reality matters. The reality is that a safe-haven metal in a chaotic financial world has a value that anybody across the world can recognise. The people in Asia and in Europe know this and do not worry about [the actions of] the paper-pushers in New York on the Comex.
“At the end of the day, the physical market trumps the paper market – the actual demand for the product matters,” he advised.
James pointed out that since gold hit its new low of $1 132/oz on November 7, the yellow metal had recovered by about 10.5%, and during these few months, several junior companies’ stocks had doubled in value such as Pretium, which was advancing the multimillion-ounce Brucejack project, in British Columbia.
Among James’ top-pick stocks for 2015 was Integra Gold, which had in September acquired the Sigma-Lamaque mill and historic mines that gave it access to an existing mill through which to process its high-grade ores, as well as a door to exploration upside.
Other top picks which he believed would provide investors with significant upside leverage included Colombia-focused Continental Gold, Dalradian Resources – which was focused on advancing the high-grade Curraghinalt gold deposit, in Northern Ireland – and Kaminak Gold with its Coffee gold project, in Canada’s Yukon Territory.