Speaking candidly, Frank Holmes of US Global Investors (NASDAQ:GROW) described the central banks as a cartel that is working to make regulatory decisions that impact the financial world.
The Investing News Network caught up with Holmes at the Prospectors & Developers Association of Canada (PDAC) convention and asked about the US Federal Reserve’s emergency interest rate cut.
“(Central banks) are all about synchronized taxation and regulation and using monetary policy to stimulate economic activity,” he said. “The US is the largest player in that space.” He believes negative interest rates in more countries will be bullish for gold.
In addition to tailwinds from interest rate cuts, a fall in supply of the yellow metal paired with growing interest and purchases from central banks are catalysts Holmes pointed to for investors to be aware of.
“Why can’t gold go to US$3,000 (per ounce)? Why can’t gold go to US$10,000?” Holmes asked. “With this massive amount of money printing to try to stimulate economic activity.”
To keep pace with increasing demand, majors will need to acquire deposits and projects from juniors, something the CEO of the investment advisory firm sees happening. He referenced Newcrest Mining’s (ASX:NCM,OTC Pink:NCMGF) growing interest in Lundin Gold (TSX:LUG,OTC Pink:FTMNF) — Newcrest owns 32 percent of Lundin — as an example of synergy in the sector.
“We saw the Chinese come into Colombia and buy Continental Gold (TSX:CNL),” he explained. “I think we’re going to see lots of mid-cap acquisitions.”
Despite seeing growth through mergers and acquisitions, Holmes believes what he described as draconian fiduciary regulations around investing in junior mining need to be changed, especially in Canada, where citizens over 65 are limited in the amount of junior mining speculation they can do.
“The regulators are saying it’s okay for me, I turned 65 last week, to go to the casino and bet as much as I want, and go the racetrack and bet as much as I want, and I can buy as many lottery tickets as I want, but God forsake I can’t have too much invested in speculation in junior mining?”
To hear more from Holmes about why the palladium price has soared over the last year and when silver will catch up to gold, watch the video above. You can also click here for our full PDAC playlist.
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Securities Disclosure: I, Georgia Williams, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.
