Thursday, 16 January 2014

John Hathaway - Tocqueville Gold Investor Letter Q4-13

Letter - HERE
Many Interesting Charts - HERE

At the current gold price, construction of new mines in most cases does not make sense. Therefore, future mine supply is jeopardized without a substantial and sustained rise in the gold price.
Miners have reduced costs sharply and are therefore highly leveraged even to a modest rise in gold prices from here. Managements seem more likely than ever to remain tight fisted on new capital commitments. Therefore, we expect cash to build on balance sheets and investor pressure to raise dividends.
We also expect to see a trickle of accretive acquisitions by a small number of management groups who view the bombed out status of the share market opportunistically. In those instances in which we have confidence in management’s investment acumen, we would be supportive of such steps.
We believe that the resolution of the disconnect between paper and physical gold will be a dramatic upside repricing of the real thing.   

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