“Everyone is excited about the energy transition metals like lithium, nickel, copper and so-called critical minerals like rare earths, gallium, germanium and niobium, which have been stealing a lot of headlines from us as gold miners. But my real view is that the market should be commodity agnostic,” he told the WA Mining Club on Thursday.
“What has been proven time and time again, regardless of the commodity you’re mining, is that project quality, profitability and the ability to grow your earnings on a per-share basis, are the real key for investors.”
Notwithstanding weakness in the past few days, Australian dollar gold has recently traded at an “amazing” record price of more than A$3000 an ounce, though the market hasn’t caught on.
“There is a bifurcation of the market between lithium and gold with a current backdrop of higher gold prices and low lithium prices which aren’t reflected in the share price of the corresponding equities,” Stralow said.
“So lithium equities are eating gold equities’ lunch despite the prevailing commodity trends.
“What the market is failing to see is that gold is actually in a very good position right now as profitability is starting to expand and there’s also several macro tailwinds supporting a higher gold price.”
On the macro front, Stralow pointed to rising US debt, which now stands at US$33.1 trillion.
He noted debt was rising by $14.3 billion plus $3 billion of interest per day and was likely to hit $50 trillion within 10 years.
Having just returned from the Gold Forum Americas in Colorado, Stralow said gold had recruited an unlikely new fan.
Mining entrepreneur Robert Friedland described gold as “barbaric“ in July.
“More important than gold are our electrical grids. We are at 50-year lows in copper stocks, just 11 hours of supply, and you are still worried about buying gold,” Friedland told a conference at the time.
Stralow described Friedland as the mining sector’s Richard Branson.
“Or to use a Perth reference, he’s Bill Beament on methamphetamine,” he said to laughter in the room.
Friedland spoke on a panel in Colorado two weeks ago and Stralow said he had changed his tune on the role of gold.
“What was in focus for him was the recent BRICS summit and the several trips he’s made to Saudi Arabia, which is joining BRICS, and their push to create a global currency which is backed by gold to be an alternative to the once-mighty US dollar,” Stralow said.
“What was important was that there is now this collaboration between countries that are representing over 40% of the world’s population and the thought that these combined forces couldn’t create an alternative currency was described in the room as the height of Western arrogance.
“This proposed currency, backed by gold rather than by government promises, would result in significant gold price upside.”
Stralow said reserve banks were already adding to their gold reserves, which were now at the highest point in history.
“If anyone can change sentiment in gold, it’s Robert Friedland.”
