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Giustra, Hathaway, Rule reflect on surging gold price, humdrum equities BEAVER CREEK
| Miners need to improve performance to cash in on rise, experts say
Entrepreneur Frank Giustra makes a point with newsletter author Alex Deluce at the Precious Metals Summit in September. HENRY LAZENBY
BY HENRY LAZENBY
B
EAVER CREEK, COLO. – Industry leaders debated the roles of economic uncertainty, inflation and monetary policy in driving gold to a record high at the Precious Metals Summit in
mid-September even as many gold equities have underperformed. The experts predict gold, which hit an all-time record of US$2,554.78 per oz. during the conference that’s since been broken, to be on a long-term bull run. Some of the sector’s most respected voices, including Sprott’s
Ronald-Peter Stöferle of Incrementum Partners and John Hathaway, managing partner with Sprott Asset Management. HENRY LAZENBY
“There have been some downright stupid capital decisions, especially around M&A and cost inflation.” RICK RULE, PRESIDENT AND CEO OF RULE INVESTMENT MEDIA
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John Hathaway, entrepreneur Frank Giustra, gold fund manager Ronald-Peter Stöferle and investor guru Rick Rule, said central bank gold buying, geopolitical tension and a divergence from traditional asset classes are boosting the yellow metal’s price. Hathaway, managing partner of Sprott Asset Management, says less than 1% of most investment portfolios are allocated to gold, showing how the asset is misunderstood. Reallocating just 2-3% to gold could push up prices by US$1,000 per oz., he said. “Positioning in gold is still incredibly low among mainstream investors,” he said during a keynote discussion with Stöferle, managing partner at Liechtenstein-based Incrementum. “Yet, with today’s new record, we are already seeing signs of the market shifting.”
Central banks Stöferle, who publishes the annual In Gold We Trust report, said central banks have been soaking up as much as 30% of annual global gold production. In the first half of 2023 alone, central banks purchased 483 tonnes of gold — a record, according to Stöferle’s data — since sanctions against Russia began in 2022. “It’s clear that we’re seeing a de-dollarization trend, with emerging markets increasingly looking to gold as a reserve asset,” Stöferle said. De-dollarization refers to the ongoing, shift driven by emerging economies, to reduce or replace the U.S. dollar as the global reserve currency. The fund manager says the longer-term outlook is more inflationary than the short-term. “We’ve spent the last 30 years globalizing, and now we’re moving in the opposite direction. De-globalization is inherently inflationary,” he said. Giustra, who helped start businesses including Wheaton Precious Metals (TSX: WPM, NYSE: WPM; LSE: WPM) and Endeavour Mining (TSX: EDV; LSE: EDV), agreed that fiscal stimulus in the United States continue to drive inflation, even as it cooled to 2.5% in August and the Federal Reserve lowered its benchmark interest rate to 4.75% to 5% on Sept. 18. Giustra warned that the country’s ballooning debt and deficits will only worsen in a recession.
YMP fetes award winners Berdahl, Cullen / 10
“The U.S. is running a US$1.9trillion deficit at full employment. What happens when we enter a recession? The deficit could easily balloon to US$4 trillion,” he Gold equities 11 > PM44082538