The three ’I’s that drive the gold price

The other thing worth watching is Indian politics, it may not be on many investors’ radar, but it’s an important driver of the price of gold. Recently, the Modi government announced that all large-denomination bank notes, which is ~85% of their currency in circulation, would soon be invalid. There’s been reports that the government may confiscate gold from people above a small amount if they can't prove how they’re unable to prove ownership.  

My number one stock for gold exposure is a company which has a project, a company which is trading in a lower metric to a lot of its peers, and that can produce some reasonable news over the next 12 to 36 months in terms of going from wherever it is now to where it could be in my investment time frame. This is Egan Street Resources, which is part of the Lion Selection Group portfolio. They’ve got a project and they’re looking to come out with a Scoping Study very shortly, which will tell us how quickly they can develop to production.

Base metals also look attractive, especially tin. Tin’s not moved as strongly as the other base metals this year. The demand for tin should remain strong, in part due to its use in solder, an essential component in many electronic devices. The supply side is deteriorating along with the grades of ore being produced by key exporter, Myanmar. Recently, Myanmar has come from nowhere to be an immense producer, but as they move from high-grade surface mining to lower grade underground mining, the situation is becoming more complex.

Some of the larger mines or areas of production globally coming to the ends of their life and closing, and there are very few new projects of the same sort of quality of those. There aren’t many new projects at all, but very few of quality projects coming to market to replace ageing global supply.

For tin, my second preferred commodity, the only company on the global scale which has a project that looks like it's got the grade and the tonnes in the ground to come to production is a company called Kasbah Resources. Kasbah is currently going through a merger with a company called Asian Mineral Resources, which will bring together an excellent team, two very good projects and with a tin development proposition now in Morocco.