After a Gold Rush, the Next Gold Rush
By Saghir Aslam
Rawalpindi, Pakistan

 

(The following information is provided solely to educate the Muslim community about investing and financial planning. It is hoped that the Ummah will benefit from this effort through greater financial empowerment, enabling the community to live with dignity and fulfill their moral obligations towards charitable activities)

Gold after rising 500 per cent in a decade, the market price of the precious metal had peaked. In the rush to exploit the boom, mining investments and costs had spun out of control.

Investors in gold miners such as Kinross, which had lavished $11bn on acquisitions in six years and was already writing off part of that spending, were in revolt. Tye Burt, MrRollinson’s predecessor, was among a score of mining chief executives to lose their jobs.

It was the end of a champagne era, everything was going up, up, up, forever and ever — and then I got the back half of the mountain, where it has been down, down, down.

This has been the challenge — running a business as you transition from one phase of the market into another,” he says on a visit to London. After a long trip to see investors in Asia, he is on his way to a gold mining conference in Switzerland. It is a grueling schedule but he is looking forward to dinner that evening with one of his daughters, who work in the UK capital.

After ensuing write-downs on Tasiast, the Canadian company was the first large gold miner to scrap its dividend: “That is one where you send the release out and want to crawl under your desk

Another project in Ecuador, Fruta Del Norte, was sold for much less than it had cost during the boom years; and when tension flared between Russia and the west over Ukraine, Kinross, the largest foreign investor in Russian mining, faced criticism over its strategy. On paper you might go, Here’s another banker … here we go again.

Four years on, his transition from banker to miner seems to suit both MrRollinson and Kinross. The miner’s shares have doubled in the past 12 months. In March, MrRollinson was at last able to unveil a definitive plan to develop Tasiast at a much lower cost.

And his stewarding of spending meant Kinross had the cash to snap up assets in the US from Barrick Gold, its larger rival, which helpfully reduced Kinross’s overall exposure to higher-risk countries.

Not least, MrRollinson, who looks the image of a tough miner but is softly spoken, is at last having some luck with the gold price, which has risen since the start of 2016. “It is hard to believe we would all be high-fiving when gold got back to $1,200 an ounce but we certainly are, and it seems to be holding in there pretty firmly,” he says.

MrRollinson has dual nationality: he was born in the UK but grew up in Canada, where his father worked in mining. He studied geology, and started his working life in Canada’s wide open spaces. “I was living in the wilderness all year round in a tent and I had some amazing experiences. It was my love of the outdoors that got me into this in the first place.”

But a key to his career may have been the finance classes he took while completing a postgraduate degree in mining engineering. On graduating he went into mining banking and a career in a succession of investment banks. He advised Kinross before Mr Burt asked him to join the miner in 2008. My intention was always to get back into mining … that is ultimately where my passion is,” MrRollinson says.

What has helped his time at Kinross, he says, is that while he came from banking he also had plenty of technical mining knowledge. As he puts it: “I can speak a few languages — geology, mining, corporate finance.

Gold’s gold rush and the next goldrush. This cycle have continued for years. I remember before the recent gold rush I held different gold investment for multiple years. Some in the form of mutual fund as well as shares of different companies. Believe me it was difficult not to sell and keep holding different gold positions year after year while we are getting nowhere. During these years my investment in gold stay the same or they would have gone down every year. I am longtime investor and I am patient investor and I held on to my investments for years. Thanks to Allah (S.W.T) as expected gold became very popular again. Hitting new highs every day, every week and every year. This long patience of holding in gold investments paid off.

Now it is the good opportunity to buy not just gold but gold, silver and the precious metals. As they will go up again. You may have to hold it for a while .It’s not easy to hold an investment that not appreciating but something like precious metals believe me patience pays off and pays off big time.

Once again you must research, you must find companies with a consistent performance, you must check out mutual funds. Their 5-10-since inception performance .Once you do all above properly then invest you will reap handsomely.

(Saghir A. Aslam only explains strategies and formulas that he has been using. He is merely providing information, and NO ADVICE is given. Mr Aslam does not endorse or recommend any broker, brokerage firm, or any investment at all, nor does he suggest that anyone will earn a profit when or if they purchase stocks, bonds or any other investments. All stocks or investment vehicles mentioned are for illustrative purposes only. Mr Aslam is not an attorney, accountant, real estate broker, stockbroker, investment advisor, or certified financial planner. Mr Aslam does not have anything for sale.)

 

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Editor: Akhtar M. Faruqui
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