John Hathaway: More Takeovers to Come Within The Gold Space

John discusses the consolidation in the big-cap miners and how this removes two of the very large cap names in the space. When you see this kind of activity there generally isn’t a lot of money going into the development of new mines. The industry at large is running out of reserves, and the pipeline of new projects is declining. There will likely be a lot of takeovers of existing small and mid-tier companies to improve these reserve portfolios.

There is a lot of apathy in the space, and the question is what will drive the gold price. The most significant catalyst would likely be the U.S. fiscal situation due to the ever-increasing debt-to-GDP ratio. Most investors haven’t considered the implications. U.S. debt growth has now exceeded the growth of the economy, and this is unlikely to change.

Central banks are reducing investment in U.S. Treasuries and instead acquiring gold. A dollar devaluation over the next few years is a real possibility and that would be terrific for gold but would likely be a difficult time for the world.

Silver shows some sign of life and investors should keep in mind that it has always been gold on steroids once gold leads the way.

There has been under-investment in copper, nickel, and oil. You will likely see a supply-demand response to this situation A recession is expected, and we may have to get through that first, but a resource rally is coming.

Many mid-tier and small mining companies remain massively undervalued.

Time Stamp Reference:
01:30 – Sector consolidation in mining.
03:00 – Apathy in the markets, U.S. fiscal situation is bleak.
06:00 – Foreign central banks have reduced investment in U.S. treasuries.
09:30 – Outlook for silver and why it follows gold.
11:00 – Outlook for other natural resources.
12:00 – Extreme valuations of some mining companies

Talking Points From This Week’s Episode:
• Consolidation in the majors.
• General apathy in the broader markets.
• The outlook for gold and silver.
• Many juniors and mid-tiers are undervalued.

John Hathaway, CFA, is Chairman of Tocqueville Management Corporation, the general partner of Tocqueville Management L.P. Mr. Hathaway joined Tocqueville in 1997. He co-manages the Tocqueville Gold Fund (TGLDX). Also, he manages separate accounts with a gold equity mandate including the Falcon Gold Fund, the Falcon Gold UCITS Fund, Tocqueville Gold Amerique (FCP), a sovereign wealth fund, and various separate accounts for family offices and government entities. Before joining Tocqueville, Mr. Hathaway co-founded and managed Hudson Capital Advisors followed by seven years with Oak Hall Advisors as the Chief Investment Officer in 1986. In 1976, he joined the investment advisory firm David J. Greene and Company, where he became a Partner. Mr. Hathaway began his investment career in 1970 as a research analyst with Spencer Trask & Co. Mr. Hathaway graduated from Harvard College in 1963 (B.A.) and the University of Virginia Business School in 1967 (M.B.A). He also holds the CFA designation.

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