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(The opinions expressed here are those of the author, a Reuters columnist.)
By Clyde Russell
LAUNCESTON, Australia, Feb 11 (Reuters) – If the "follow the money" adage is to be applied to commodities, the place that seems most attractive to investors is gold mining.
The common theme of the two mining investment conferences held last week in Cape Town was that cash for gold mining companies offered the best prospects in the commodities sector.
At the 121 Mining Investment event, about half of the more than 100 mining companies present were either pure gold games or targeted the precious metal in their portfolio.
The conference was aimed at bringing together mainly junior juniors with investors looking for growth opportunities, and it was clear that the gold companies were the perfume of the month.
A panel of investors from across the spectrum, ranging from large banks to smaller specialized funds, unanimously supported their support for gold.
"For us, gold is the only place to be this year," said one of the fund managers, who could not be identified because the event occurred proceeded according to the rules of Chatham House.
Another investor who, in addition to placing funds in young miners, offers his expertise and industry contacts by sitting on the board, said the hype surrounding lithium, cobalt and other metals The battery had largely been attenuated and had been replaced by gold.
At Investing in African Mining Indaba, which was also held in Cape Town last week, gold companies were on the agenda. The three-day program for young miners, devoted to the yellow metal, lasted practically more than a day. battery metals, copper, uranium or other minerals.
The rise of interest in the exploitation of gold was twofold; first, the outlook for gold prices and, second, the relative benefits of exploring and developing a gold project compared to other types of mines.
REWARDS, RISKS
The likelihood of the US Federal Reserve curbing interest rate hikes and increasing clouds on the global economy has favored gold prospects for 2019, with some conference participants even having the audacity to launch a sustained bullish movement.
While it is generally advisable to treat bulls with caution because of their permanent "buy" recommendation, it is possible to argue that the gloomy market for precious metal in recent years may be over.
The spot gold trend has been rising since the last low of $ 11,173 per ounce last August 16, reaching $ 1,314 on February 8, an increase of 12%.
Gold has a fairly strong inverse correlation with 10-year US Treasuries, which tends to recover as performance declines.
The 10-year yield has fallen in recent weeks, as the market reacts to the worsening economic outlook, the Fed's lower rate hike risk, and the lingering uncertainty surrounding the trade dispute between the government and the government. of US President Donald Trump and China.
On the mining front, gold mining and the creation of a new mine compare favorably in terms of capital costs with similar efforts for copper, cobalt and others minerals.
While Africa as a whole suffers from a poor image among investors, the most attractive countries on the scale also tend to be places where gold can be discovered and developed.
These include countries such as Ghana, Mali and even the former world energy powerhouse, South Africa.
However, the two Cape Town events have also highlighted the challenges of delivering projects in Africa, many complaints that continental governments are changing the rules too often and are generally seeking to extract more of the money. mineral wealth, perhaps to the point that mines become unsustainable.
The kidnapping and badbadination of Canadian geologist Kirk Woodman in Burkina Faso, a country of West Africa, last month while he was working for the ### ### #################################################################################### Progress Minerals gold miner also highlights the dangers of working in some countries.
Nevertheless, the happiest miners in Cape Town were those who operated gold mines either in production or close to production because it was their conference booth that investors followed. (Edited by Christian Schmollinger)
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