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Investing In Gold Mining Companies – Max Warren Barber

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Max Warren Barber, CEO Sion Gold Trading UAE is the current head of Inspiration Mining and was recently interviewed about investing in gold mining companies.  Recently, the mining sector has seen year to date share prices fall to 2008 levels with several big players’ stock prices down over 50%.  The gold sector is still out of favour, with prices finding support in the $1200 range.  The sector’s sell off was due in large part to the decline in the price of gold, which led to an estimated $21 billion in write-offs across the industry.  When gold dips below $1200 an ounce, several gold mining operations are not able to turn a profit.  Key indicators, such as the Market Vectors Gold Mining ETF show that the sector is at the bottom of 52 week price ranges.

 

INTRODUCTION TO GOLD MINING

Since ancient times, mining has been primarily focused on extracting rich minerals and metals from the earth while leaving the remainder behind.

The majority of human history has seen mining technologies focused on cutting cost and raising the output of material produced. This steadfast outlook encouraged economic development and provided the necessary materials to produce new things. It also significantly contaminates the environment, frequently harming ecosystems. It also had a significant impact on the environment. Given that the effects of mining operations from two millennia ago can still be seen today, massive dams and open pit mining affected hydrological systems; occasionally, these structures failed and released contaminated water back into the ecosystem.

TRENDS OF GOLD TRADING

The mining industry needs to innovate in order to improve the efficiency of its procedures, reduce costs, and address the growing social and environmental concerns among communities and authorities. Furthermore, the development of technology has been crucial for the exploitation of new resources in more difficult conditions, such as poor ore grades, harsh weather, deeper deposits, harder rock masses, and high-stress environments. This essay explores the importance of innovation to the mining industry and describes the mechanisms that make it possible. The main players and current trends are covered. The sector’s digital transformation process is studied, along with other significant developments that may have an impact on mining in the future.

PROBLEMS RELATED TO GOLD TRADING

Over the past few decades, the mining industry has had to deal with challenging operating conditions. Due to the need to boost productivity to counteract natural reasons like diminishing ore grades, deeper deposits, and harder rock mass, the industry is constantly improving its operations along the entire value chain. Innovation significantly contributes to preserving the continuity and sustainability of the mining operation by providing appropriate ways to solve these difficulties.

 

According to many powerful actors in the industry today, mining is only beginning a significant upheaval brought on by the digital revolution. According to reports, this technology has the potential to convert human-managed mining operations into fully or partially automated remote-controlled mines.

SOLUTIONS AND REVOLUTION

The industry’s adoption of new technologies is being aided by a number of factors. Between roughly 2003 and 2011, the number of operational and proposed mines expanded quickly as a result of persistently high prices caused by demand from emerging economic powers, particularly the People’s Republic of China. Due to the decline in demand that began in 2008 and ended in 2011, lean and efficient operations have once again come into focus. As the richest and most accessible resources have been mined, the industry is increasingly targeting deposits with lower ore concentrations and/or lower depths, which has exacerbated this reduction.

 

 Basic strategy 

 

“The basic strategy for buying stocks is to buy low.” Max Warren Barber,  stated.  “Right now, the gold mining sector has taken a pretty bad beating.  What this has done is shake out the smaller operations.  You take an outfit like Inspiration Mining which has been around since the early 1990s, and experience in the markets works to our advantage.  The sector has bottomed out, bargain shoppers should put mining outfits on their radar.”

Another factor that led to the depression in the gold sector centres around the inflation that never materialised from the Fed’s liquidity injection.  Historically, gold is a safe harbour to hedge against inflation.  The increase in share prices was never substantiated, leading to share prices going into a free fall.  Some analysts predict inflationary pressures are starting to rise again.

The argument that inflation will impact world economies is supported historically.  Whenever an economy recovers from a recession, as seen both in American and European markets, people spend less.  This slows down velocity and the economy.  With the injection of funds from the Federal Reserve, an enormous amount of money was pumped into the economy.  As economic growth picks up, so does velocity.  This can lead to an overall increase in prices.  The inflation report shows a consistent, upward trend.

Gold stocks.

“If inflation keeps on its current trend, I think we will see a migration back into mining and gold stocks.” Max Warren Barber,  asserted.  “The feds pumped a lot of money into the economy, that money is not going to just disappear and the historic cycle from recession to inflation will unfortunately repeat itself.  To hedge against inflation, gold and mining is the place you want to have exposure in your portfolio.”

 

After considering the argument that mining and gold stocks may make a rebound in 2014, Mr Max Warren Barber, CEO Sion Gold Trading UAE was asked what to look for when reviewing a company for investment consideration.  “Cash is always king.  At Inspiration Mining, we have a very healthy balance sheet.  Always look at assets and liquid cash.  Any mining company needs both of these to sustain operations.  Inspiration Mining has six properties across two continents.  Also, you want to look at the experience of the management team.  I have been with Inspiration Mining for over 15 years and our team has seen every market condition imaginable.  There is no replacement for experience.”

Summary

 According to Max Warren Barber, CEO Sion Gold Trading UAE  your best investment option is to have a hedge against inflation.  In the case of inflation, long term bonds get hit the worst.  Money market funds and short term bonds usually do much better for capital return.  In short, a conservative strategy with exposure to market sectors that historically perform well during inflationary times is your safest bet.  For more information about marketing,

 

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