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From Komfie Manalo, Opalesque Asia:
The Qatari Royal Family’s $10bn investments in gold producers make a lot of sense, according to Uwe Eberle, Managing Director of Van Eck Global during the latest Opalesque Gulf Roundtable.
The Opalesque Gulf Roundtable took place in Abu Dhabi last month and was sponsored by Van Eck Global, a global commodities asset manager, and Eurex, the European exchange.
"Gold mining stocks were lackluster for quite a while and currently are very cheap when compared to historical valuations," he explained. "In my opinion, mainly due to the increase of the production costs, investors are ignoring the strongly increasing cash margins and the significant cash flow generation of the industry.
"The two major production costs are energy and labor costs. If world economic growth is slowing, I believe demand for commodities and energy should go down, and so should prices. Gold Mining stocks, on the other hand, should profit from a stable to higher gold price (fear trade would be on), but even more from the lower production costs."
He added: "If energy is going down, gold mining stock could strongly outperform and deliver great returns, at a time when they need it."
But Eberle admitted ...................... To view our full article Click here
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