Nolan Watson: “Institutional, Generalist & Value Funds Are Now Preparing To Jump In On Gold & Miners”
November 7, 2013 | By Tekoa Da Silva
I had the opportunity today to review Sandstorm Gold‘s Q3 2013 conference call, led by the company’s co-founder, President & CEO, Nolan Watson.
Nolan historically served as the first employee and CFO at Silver Wheaton, and in the years since, earned numerous industry accolades and business recognitions.
As usual, the Sandstorm Q3 conference call provided an interesting “surgeon’s look” at the heart of the junior and mid-tier resource capital markets, and of particular note during this call, Nolan reported that investment capital is now in the early stages of circulating back through an otherwise dying body of a resource market.
Speaking first towards the company’s metal of focus, gold, Nolan indicated that, “For the past two quarterly calls, I’ve stated that I was moderately bearish in the short term, but still bullish on gold in the longer term, and today at Sandstorm we still feel that way. However, we are becoming more optimistic that we’re getting close to a bottom in the market.”
With respect to why a bottom in gold and resource shares may be close at hand, Nolan explained that, “We are seeing signs that various forms of capital are once again seriously looking at potentially investing in mining. We’re not seeing material increases in fund flows to the mining industry yet, but we are seeing evidence of market capital looking to be invested in mining which is an important first step in the basic functioning of resource capital markets.”
That basic functioning, according to Nolan, “Is an important step we need to see before we’re willing to make significant or large investments in new development projects.”
Further commenting on gold towards the end of the call, Nolan said, “When the gold price dropped precipitously, everyone who had bought anything took a little bit of a breather in terms of buying anything, just because they wanted to figure out where the market was going to end up, and so I think we have a strong feeling now that the market is getting closer to a bottom than it was before…[and so] what we are starting to see, is a number of institutional investors, generalist funds, and value investors…trying to spot the bottom…before they jump in.”
As a final comment to end the conference call, Nolan concluded that, “There is a lot of capital that is ready, willing, and able to deploy into the mining industry, [but again] they are trying to spot the bottom…before they jump in.”
This was another fascinating call with the world’s foremost resource “streaming” deal-maker, and is required listening for junior resource investors and serious market students.
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Tekoa Da Silva
Bull Market Thinking