Exclusive Interview with ASA Gold and Precious Metals Limited Fund President David J. Christensen

February 21, 2012 | By Tekoa Da Silva | Leave a Comment

david Last week I was lucky enough to connect with David J. Christensen for one of the most fun interviews I’ve had so far this year. David is President, CEO, and Director of ASA Gold and Precious Metals Limited, a closed-end mutual fund with over $600 million in net assets focused on precious metals equity investments.

This interview was particularly intriguing because David entered the precious metals business 25 years ago, just before gold began moving into it’s bear market bottom. Since that time, David has become a leader in the precious metals investment industry—meeting and investing regularly with the top mining management teams in the world.

When asked about the severe climate of the bear market bottom in gold years ago, David commented that, “On my first day of work [over 25 yrs ago] gold was trading at $500 oz., and it collapsed that day. We lost close to $50 million my first day on the job—a rather depressing start to one’s career…Nevertheless we managed to do very well during that period despite a down market by investing in gold mining companies that we thought had growth attributes which would allow them to outperform the precious metals. We managed to find ways within precious metals to make money despite the declining gold price environment. It was a real interesting time for the market.”

When describing the human resource environment at the turning point of the market bottom in the 1990s, David said, “Most of the major funds at that time were small portfolios within larger complexes (such as Fidelity, or Franklin, or USAA), but there was only a handful of portfolio managers that had been specializing in this sector. The irony is, about the time that the turn came in the gold price, there was probably only five people in the industr gold1 y in North America that had done it for more than three or four years. So Wall Street was running around looking for analysts to cover the sector…because there was nobody left that understood the industry.”

When asked about the differences in the mining equity market today compared to the 1990s, David explained that, “It was easier to find companies that could contribute to shareholder value at the bottom of the cycle because the profitability and management expertise at the individual companies was more clearly demonstrated in such difficult operating environments. Today with gold trading at $1700 oz…It makes ascertaining the stronger companies from the weaker ones more difficult than it was two decades ago…I would actually say the environment is more difficult today [as a value investor] at these prices than it was two decades ago at $250 oz.”

Speaking on ideal environments for value-driven mining equity investors, David commented, “When mining companies can raise equity, it is perhaps not the best time for the investor. The ease of raising money for mining companies today is much easier than it was two decades ago, and the Canadian bought-deal structure has made mining finance pretty easy to come by for the most part—although in the last six months it’s been tough for some of the smaller companies. So by and large finding value today is a difficult endeavor, and we’re having to put more work into it here at ASA than we probably ever have.”

This was another commentary from one of the “greats” in the precious metals investment business, and is required listening for mining equity investors. Investors would further behoove themselves by closely following future commentary by Mr. Christensen, and others like him, who have entered the industry during a time in which anything less than excellence was not allowed to survive in the marketplace.

To listen to the interview, click the following link and/or save to to your desktop:

Interview with David J. Christensen

To learn more about David J. Christensen and ASA visit: ASA Gold & Precious Metals Limited

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Thanks,
Tekoa

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