Willem Middelkoop: Exploration Crisis is a Perfect Storm for Investors

Interview by Charlotte McLeod; article by Scott Tibballs.

A lack of exploration dollars will lead to production deficits coming back to bite the resources industry, according to Willem Middelkoop, founder of the Commodity Discovery Fund.

Speaking with the Investing News Network at Mines and Money London, Middelkoop said that the lack of investment dollars in exploration ever since the global financial crisis is itself a “crisis.”

“And so now we’ve reached a situation where we see production deficits appear.”

Middelkoop singled out the special cases for metals first, pointing to silver and palladium as unique.

“If we look at silver, silver has been in deficit since the 1950s. It’s a very special situation, and because we had all this aboveground stock in silver — all the old silver coins from the last century — we don’t see any physical shortage in silver, but it’s remarkable.”

Another precious metal — palladium — has seen its value increase dramatically over the past few years due to production being unable to keep up with demand. The metal is vital in the pollution-controlling components of internal combustion engine vehicles.

“There’s quite a bit of stress in the physical palladium markets, and because of this stress the palladium price has jumped from US$450 an ounce three years ago to almost US$1,800 nowadays, and that’s a clear example of what can happen and what will happen in our industry.”

Other commodities Middelkoop singled out are copper, nickel and zinc — with iron named as one of the few that won’t see a physical shortage.

The result of all this, said Middelkoop, is a “perfect storm for investors.”

“Markets are so depressed, valuations are so low, you know that 10 years out you’ll have this shortage in some of the metal market. Now’s the time to invest.”

Listen to the full interview above for Middelkoop’s thoughts on why so much capital has fled the resources sector and to hear of some of the exploration companies Middelkoop and the Netherlands-based Commodity Discovery Fund are keeping an eye on.

Also, listen for Middelkoop’s thoughts on what’s happening with the gold standard and why, and what that means for the future of the US dollar in markets.

You can click here to view our full Mines and Money London playlist on YouTube.

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Securities Disclosure: I, Scott Tibballs, 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.