February 2014

There are about 1,800 resource companies on the Toronto Stock Exchange and TSX Venture Exchange and a capital shortage. The demand for capital is huge, but the supply is low.

I think the mining industry is moving on from large projects — projects with capex over $1.5B. Large projects are just too hard to manage and cost overruns become problematic rapidly.

According to Bob Moriarty, the force behind 321gold, the “fact that everyone hated gold in December is a good reason for rational people to love it now.”

Since inception, the ETFs have eroded the premiums of gold mining companies. But most of the erosion has happened among majors and intermediate producers, less so for junior developers and explorers, as they do not actually produce gold and do not attract the same investor base.

Cosmos Chiu: The U.S. economic data is nothing new. Last year certainly wasn’t the best for gold. However, the bad news has already been priced in. We’ve seen some pretty robust U.S. data come out first thing in 2014 and gold prices have held up at the $1,200/oz level.

Paper gold, especially over the last few years, has been primarily held by North American short-term speculators. Physical gold is more of a long-term holding. Europeans who are concerned about the long-term viability of euro-denominated assets are holding on to physical gold as a store of wealth, as protection. China is now vying with India as the largest market for physical gold.