Even in the worst resource market in history, companies with good management teams can increase in value. In this interview with The Gold Report, U.S. Global Investors CEO Frank Holmes talks about whether this is the right time to get back into gold, and Portfolio Manager Ralph Aldis reports on the performance of companies in the portfolio and shares some of the names in Australia that have done so well he almost feels guilty about how easy it is to make money off them.
The Gold Report: A number of thought leaders in the larger investing community have come out lately in favor of gold. How do you know it is time to move into the resource?
Frank Holmes: You have to consider the source. If it is a Goldman Sachs or a J.P. Morgan, ask whether they are talking their book. Do some homework and find out if they are long or short. The secret is to find people who are delivering great outcomes and ask what their processes are and what is their passion.
TGR: What is your process for finding the best time to move in the resource sector?
FH: We look at the two pillars of demand, the love trade and the fear trade. This is the beginning of the wedding and holiday season in Asia so the love trade is just ramping up right now. The fear trade is based on the machinations taking place in China and at the Federal Reserve right now. Just before the big United Nations meeting in New York, China devalued its currency. This was a signal to the U.S. that it will be going in a different direction from where the Federal Reserve is taking the dollar. What most people don’t know is that real interest rates have already increased from negative …read more