Frank Holmes, CEO and chief investment officer at U.S. Global Investors, gave a talk at the Cambridge House conference titled “Fear Trade Sees Gold as a Store of Value When Interest Rates Are Negative.” Holmes always focuses on the global supply-and-demand equation whether it is traveling to better understand the odds and implications of a possible strike in Chile or changes in what he calls the “love trade” based on buying gold for celebrations in India and China. “This is a classic bottom-of-the-trough year,” he said. He pointed to companies slashing exploration costs, apathetic investors, and the bottom-line impact of “draconian” regulations for raising capital. “The cost of being a public company is almost prohibitive,” he said.
On the supply side of the balance sheet, Holmes warned that reserves for some commodities—particularly copper, gold and zinc where not enough had been invested over the last 15 years—are starting to shrink. “Any disruption in supply or pickup in demand will lead to a higher price. That could happen as soon as this year,” he said.
On the demand side, in addition to the traditional seasonal jewelry demand, he cautioned investors to watch the actions of the Federal Reserve as interest rate hikes could cause a rush of fear trade to the safe harbor of gold.
John Kaiser, author of Kaiser Research Online, celebrated the practical spirit of the hard-core companies and investors still attending conferences and moving projects along during a bear market. He was also looking at the implications of a possible Federal Reserve interest rate hike in his presentation at the Cambridge House conference titled “Fast and Slow Trains out of the Bear Market Trough.” “It could cause a financial meltdown in the bond market that ripples into general equity markets with knock-on effects similar …read more