Adrian Day: M&A in the Gold Space a “Very, Very Positive Sign”

Are better times ahead for gold and gold companies? According to Adrian Day of Adrian Day Asset Management, “yes” is a likely answer.

“Right now I think there’s some good signs that the market is turning, particularly for gold stocks,” he said on the sidelines of last week’s Denver Gold Forum.

“In terms of price we are back to, for most stocks … where we were in 2001, at the beginning of a bull market. In terms of valuations, we’re not at the absolute lows for the last 20 years, but we’re very close to those lows,” he added.

Day pointed to recent M&A activity in the space as an indication that the market is headed in the right direction. “We are beginning to see a lot of activity in the M&A, and I think that’s a very, very positive sign because people are recognizing the value,” he noted.

The last week and a half has brought a slew of M&A moves in the gold space, including the deal between major miners Barrick Gold (TSX:ABX,NYSE:ABX) and Randgold Resources (LSE:RRS).

Of course, that doesn’t mean all is well in the gold space, and Day also shared his thoughts on two key problems he sees: misallocation of capital and companies that fail to act counter-cyclically.

Day ended with the following words, “if you’re not [invested in gold], I really, truly think this is a great time to be investing. There’s some super companies out there that are very, very cheap right now, very cheap. [You] just have to be patient.”

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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.

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