We attended the Denver Gold Forum in September and met with a range of companies. Despite the high gold prices, there was no sense of euphoria, and the overall message was one of sound business fundamentals. A priority was placed on organic growth through brownfields expansion and/or increasing reserve lives. Companies were not talking about expansions through M&A or large greenfields development. These were the main sources of value destruction in the last bull cycle when companies overpaid for acquisitions and developed properties that required too much capital.
Joe Foster on His Way to Visit a Gold Mine in Colombia
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Given the newness of $1,500 gold, the real test will come at the next Denver Gold Forum. If the gold price remains elevated and if companies are still exhibiting strong capital discipline while containing costs, investors should be very happy.
About the Author:
Joe Foster has been Portfolio Manager for the VanEck International Investors Gold Fund since 1998 and the VanEck – Global Gold UCITS Fund since 2012. Mr. Foster, an acknowledged authority on gold, has over 10 years of dedicated experience in geology and mining including as a gold geologist in Nevada. He has appeared in The Wall Street Journal, Financial Times, Barron's, and on Reuters, CNBC and Bloomberg TV. Mr. Foster has also published articles in a number of mining journals, including Mining Engineering and Geological Society of Nevada.
The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.