Gold to ‘Go Much Higher’ & Mining Giants Poised for Growth through M&A – Alain Corbani

Gold to ‘Go Much Higher’ & Mining Giants Poised for Growth through M&A – Alain Corbani

hey everyone I’m Jeremy saffr this is Kiko news if you haven’t already don’t forget to hit that subscribe button for the latest now gold prices have been fluctuating recently holding within a pretty tight range here hitting almost 2450 per ounce at a high point now this range-bound trading comes as investors await key decisions from the Federal Reserve and digest the latest upcoming inflation data adding to the uncertainty or geopolitical tensions playing out in Eastern Europe the Middle East and the South China Sea at a time when El are heating up in Europe and the United States and as we head over to the mining sector raising Capital has become increasingly difficult leading to a significant surge in m&a companies are focusing on increasing efficiency and consolidating resources in order to navigate this exitus of capital for example mining mergers and Acquisitions surged by 30% in the first half of this year alone now this wave of consolidation is reshaping the industry impacting stock evaluations and opening new avenues for investors our next guest has been closely watching it all let’s welcome Alan corbani he’s the head of Mining and portfolio manager at M blue finance and he’s also in charge of the global golden precious fund alen thanks for coming on and joining us today thank you very much Jeremy uh and uh thank you for uh uh inviting me to to your show of course uh I know it’s a little bit of a different time in Paris than it is over here uh but let’s start with gold prices and unpack it just a little bit I recently you know I was just talking about these fluctuating prices in that range but it’s keeping pretty tight and then talk to me about these recent gold moves as it comes off a little bit today and what’s at play here you know it’s this is probably the most difficult question to ask uh uh because it’s really uh a very shortterm uh uh question uh but uh but I have an answer for you and the answer is basically a lack of visibility that has been really uh been in motion for the last uh uh two years and uh uh bear with me a second in two in the last two years gold has has gone up by 25% and this is despite the fact that uh the um uh the speculation on the direction of rates that you just mentioned earlier in your intro um went uh uh uh on a roller coaster from uh being very aggressive anticipating really like almost 200 basis points in in in raid cards to to only one now because the median now if you look at the median forecast of the fomc of of June uh well it was basically expecting one rate cut in 2024 and that was coming from uh as I said earlier almost 200 beeps so there is a lack of visibility and and the forecast for 2025 is a cut of 100 basis points so uh this is not significant enough to give and help gold go higher in the very short term so we are evolving in that 2300 range can we go to 2200 of course we can uh um but keep in mind that the average price of the second quarter for gold 2024 versus the first quarter of 2024 is there’s a price difference of more than $200 this is huge so uh maybe gold is disappointing you in the very short term but the reality is that it keeps it keeps going up yeah and it and it’s really sitting here I mean the nice part is is after that $2,300 resistance we’ve seen a nice balance out and you know as you mentioned while many attribute this rise to expectations of the Federal Reserve right cuts and then of course we have geopolitical tension I’m curious are there other underlying factors you know shifts in investor sentiment or other economic data that are playing a crucial role here on the pricing Pro well there are a lot of things if you look at the the the components of of of demand of physical gold you realize that a lot of people people uh you read a lot about central banks buying gold and this is the main reason behind this search in the price of gold the reality is that it’s not only central banks so uh retail is buying gold uh uh coins uh uh uh American retail is buying silver uh the Chinese retail is buying a lot of gold uh so it’s it’s really uh uh uh uh a basket of different players who participated in the rise of the price of gold by increasing demand uh now the institutions haven’t participated yet I I should be more precise by saying that the uh uh Western uh uh investors institutional investors haven’t really uh jumped into the wagon yet and a lot of people who are bll on the price of gold are waiting for these players to to get involved to move the price of gold higher I don’t think we need them for the price of gold to go higher but that will definitely be a supplemental uh uh uh U uh demand component that that would help uh uh an increase in the price of gold right yeah and you mentioned those Western retail investors and institutional investors I mean if you can make 30% of Nvidia Maybe not today but in those rise it’s not a question but going back to your original point about China I mean obviously we know that they’ve become a dominant player in the gold market you know reports have indicated that they’ve been buying for the last 16 consecutive months on the Central Bank side and then we had this little pause now we saw a little bit of a up uh downt in the market when we heard rhetoric about this pause but you know then you know despite us breaking down whether or not China is buying do you think the West is losing it dominance to the east in terms of the gold market uh it it is not yet and it’s far it is far from from from losing it if just you look at the percentages of gold reserves uh in the in within the central banks Western central banks so we we are still the biggest player percentage wise but uh my point here is to say that uh nobody on in the western world has already gotten involved in Gold because they are all expecting they want to see the first cut in rates and this is what is preventing a lot of investors to get involved in the sector they have been disappointed so many times and as we said earlier we had a roller coaster in anticipations disappointments a lot of expectations uh and then uh we came back to a neutral level today with the one rate cut maybe two rate cuts the reality is that let’s stop speculating and those investors who are not involved institutional investors who are not touching gold yet will be involved once the FED Cuts its rates and most probably this will happen this year yeah yeah and to be honest I mean we’ve we’ve had so much narrative as you mentioned we started covering at the beginning of January with six rate Cuts now I mean we’re looking at a possibility of one we have upcoming elections you know I’m curious because you showed me a graph before this and I want to bring that up and talk to you a little bit Len because you know essentially in history we don’t have to look too far to understand that when the FED decreases their interest rates gold goes up talk to me a little bit about this notion yes and and and there is this uh jazz musician uh char uh I don’t know if you if you know Charles Mingus but uh basically very famous jazz player and and he said I love this sentence he said uh making uh things uh uh making simple complicated is common place and making a complicated simple is Art so I don’t pretend to be an artist but but the the reality is that mass has been said and each time the fed that’s history and each time the FED paused each time the FED paused gold went up and gold went up not because the FED paused because the market anticipated lower rates after that phase of pause so each time that was in 2000 in 20 2007 in 2019 each time the FED paused gold went up by 50% 5 so let’s make things simple in in order for gold to perform well the FED needs to pause we are really in that environment and for the last two two years gold has done extremely well and gold will continue doing well because we do strongly more than strongly we know that the next phase will be uh to cut rates and lower rates will definitely help the price of gold go much higher yeah Alan even as you said I mean despite whatever happens within the news rhetoric out there gold is still very resilient around these levels and has had a really nice run here holding steady I mean uh there’s a commodity strategist at the Bank of America Michael Whitmer he came out and suggested that gold could hit $3,000 within the next 12 to 18 months if non-commercial demand picks up so talk to me a little bit do you agree with this optimistic forecast uh and what’s your forecast here and why okay what that when when uh I sat down uh with your uh uh colleague um I several months ago I think we were gold was around 2000 and and the the question was where do you see gold I said maybe 2500 so and when I said 2500 I strongly believed that you would get there but I didn’t want to be too aggressive and be perceived as uh a gold box speculating uh without reasoning the reality is that gold can go much higher and 3,000 is really not not farfetched far far from being farfetched so if you ask me today can gold hit 3,000 the answer is yes absolutely because again just look at the statistics I gave you earlier each time the FED pause then we reverse into lower rates gold goes up by 50% so just run the numbers 2 50% of 2,000 you get your 3,000 that’s more or less a bulk figure but uh you won’t the investors won’t blame me for being a $100 short or or or long uh that that Target right nowen what changes this I mean what are the closest things that you’re watching are you looking at more geopolitical situations around the world are you looking at elections what’s going to change it’s all fundamentals these are these are excuses yeah you know geopolitical uh uh uh uh um uh uh the the in general generally speaking those events are um tactical events and and we don’t spend too much time on on on on being tactical on those issues that nobody can really control and frankly I don’t be maybe it helped demand did increase on the back of of some uh geopolitical instability but let’s be let’s be realistic uh the war in Ukraine has gone uh for for for a couple of years now um and and frankly I don’t think that you are buying gold because because of the war in Ukraine and I really don’t believe that you are buying gold because of what’s going on in the Middle East and uh and I can add to at least U with what’s happening in Africa or or in Southeast Asia uh people are buying gold when rates go down let’s be as pragmatic as possible and uh uh do we have a a fight for uh the supremacy of the US currency yes we do but is this really impacting the direction of the price of gold over uh mid to shortterm period of one two three four years the the answer is no so did did the dollar Peak yes it did Peak but make no mistake no mistake the the the Americans will use their currency at the right time to uh to fight uh recession so just be patient will get a lower currency when time comes and this will be another addition to the list of uh um uh elements that will contribute to a higher price of gold yeah and how patient though alen I mean we’ve been saying this for a while and obviously us being in the mining and precious metal space we’re we’re fairly Pro you know patient people it’s so cyclical but when are you expecting things to Really Turn Around why you know it’s it’s as if you are we are seeing the same glass of water half empty or half full you are not satisfied with the price of gold going up by 25% in two years I am satisfied as an investor as an Institutional Investor I think that the price of gold did pretty well where I could agree with you and where I am uh uh I could be a little bit upset I’m rarely upset but when I I could be upset at the mining industry because they have been they have not been able and I think that we are seeing the end of that road to control their costs and we can talk about mining companies and we can talk about the fact that they haven’t been able to uh uh control their cost and increase their margins they did increase their margins but not enough when you have a 30% volatility you expect a higher return than a return identical to the price of gold correct so of course this is where I would agree with you uh it’s about time that those miners start showing one a stabilization of their costs and IDE lower cost you add this element to a higher price of gold and you get your reward and hopefully will get it in the next year or two interesting okay so alen there’s a lot of people that are saying that you know you look to the mining stocks out there on the equity side a lot of them currently undervalued are they Fair priced and do you see opportunities for growth as you lay down that road map you just talked about uh this deserves to be discussed in a second uh uh aot program because because there’s a lot to to talk about but uh I could show you metrics that’s uh with Will Tell Val will lead you to conclude that gold miners with their cost structure today are fairly valued okay now the reality is that if they stabilize their cost and the last quarter did show of stabilization but we don’t need one quarter we need to see two quarters and three quarters of stabilization with the higher gold price and suddenly margins will expand if margins expand then gold mines are really cheap so let’s see what happens to Q2 probably their margins will expend by 20% maybe 30% this is the first step toward a revaluation of the gold mines but if they don’t monitor their costs there is a case to say that they are not super super oversold yeah yeah you know Al you’ve been investing in these companies for a long time I’m wondering how crucial management teams are in the successive mining companies I mean how important are the management what do you look at what are the key traits when you’re looking at these types of Investments to kind of differentiate from the players as you mentioned that might not have very much to those that are increasing their margins taking their cost down and playing the steady game here as you said it I never invest in companies without knowing the the management without meeting sitting down with the management knowing their history their background what they have achieved and basically uh the pros and the cons because when you look at a a summary of of resume of of of an individual there will always be some weaknesses and some strength so in a humble way we’re we’re trying to understand the people behind those companies and we need them to convey confidence and demonstrate that they have been able to execute and if they haven’t been executing have the right reasons for for for having been prevented from from from executing so yes the people first and foremost the quality of the asset of course the location of the asset will deserve a premium or a discount and and and and and frankly uh if you have these three ingredients uh in your pot uh you should be able to uh to do well and you said it Jeremy and you said it and you said it very well it’s a cyclical industry let’s not forget it so you also want some leverage names you don’t you want to be with the right people but you don’t need necessarily an asset that is producing with high margins or above average margins you really want to have an asset that could deliver in a higher price gold price environment now Al you know I’m going to ask ask you cuz I have to are you specifically looking at any of these equities that you can share with the audience any that have you know kind of taken down their costs increase their margins like we just discussed that uh might take advantage of this next little while of precious metals prices being up here I would have loved to but uh uh I am not I am not uh uh uh I would be uh operating beyond my regulatory uh uh I hear you Authority so so I will not be able to to mention names unfortunately let me ask you a different question then I mean we just talked about how hard capital is to come by for mining companies at least for the past you know year or two a lot of these companies with very high costs very low margins hasn’t been that successful at raising Capital so we’re seeing this acquisition in you know obviously m&a mergers and Acquisitions a bit of a consolidation taking place is this trend going to continue as a lot of these miners are getting left behind talk to me a little bit about this excellent excellent point and and basically uh um we have been wrong because we have been too early but again we’re talking about a cyclical industry and the cyclical industry means cycle and usually a cycle is made of two phases the first phase in the bull cycle is the focus on uh uh B bance sheet Improvement is uh a focus on cost reductions lower Investments getting griid of marginal uh uh operations and this is really the theme of the first phase and we have been seeing for the last two and a half years that that second phase of the bull cycle uh should and will uh uh start favoring the theme of growth so first you have Financial discipline phase two you have growth and this will happen with a higher price of gold so the higher the gold price will go the more uh the Mandate of those uh uh uh uh boards and uh executive teams will change and they will have to favor growth over Financial discipline because it is a cyclical industry so let’s not judge the the point is not to judge the point is to understand and use our knowledge to deliver some some some returns so yeah uh phase two is a growth phase and again we favor all those intermediary names are known producer names that have assets that deserve to be put into production yeah well said well said and uh next phase what’s that step three what are you calling that it’s the peak of the psycho and we’re not there yet yet and we’re not there yet we haven’t we are hardly starting the phase two yeah well said well Alan corbani head of Mining and fund manager at the mlo finance of course it’s always a pleasure to have you on could have unpacked this for so much longer but we’ll have you on again and we’ll focus just on those mining stocks let’s get to the bottom of it sound like a date was great pleasure thanks alen thanks for joining us making the time to I appreciate it thank you very much Jeremy of course I’m Jeremy saffron for all of us here at kod news we thank you for watching don’t forget to hit that notification button so that you can stay in up toate with all of our exciting content we got lots of great things to come [Music]

Jeremy Szafron, Anchor at Kitco News, interviews Alain Corbani, Head of Mining and Fund Manager at Montbleu Finance, to explore the shifts and future prospects within the gold and mining sectors. Corbani shares his predictions on gold prices potentially reaching $3,000 and explains the crucial factors driving the market, including Federal Reserve policies and increased demand from retail investors. Corbani also addresses the mining industry’s strategic shift from cost-cutting to growth, driven by the surging gold prices and a challenging capital-raising environment. Corbani touches on the significant role of geopolitical tensions and retail investment patterns in shaping the current and future state of the gold market.

Follow Jeremy Szafron on X: @JeremySzafron (https://twitter.com/JeremySzafron)
Follow Kitco News on X: @KitcoNewsNOW (https://twitter.com/kitconewsnow)
Follow Alain Corbani on X: @corbani (https://twitter.com/corbani)

00:00 – Opening
01:45 – Impact of FED Decisions on Gold Prices
02:14 – Gold’s 25% Rise Amid Rate Speculations
04:08 – Real Drivers of Gold’s Demand
06:04 – Gold Prices and Geopolitical Tensions
08:01 – Future of Gold Prices and Fed Rate Cuts
09:47 – Retail Investor Impact on Gold Markets
12:05 – Mining Industry’s Shift to Growth
16:19 – Mining Stocks and Market Valuations
17:30 – Role of Management in Mining Success

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#InvestingTips #CommodityTrading #FederalReserve #EconomicTrends #FinancialMarkets #GoldForecast #MarketAnalysis #InvestorInsight #GoldRush #FinanceEducation
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