Wednesday, November 16, 2011

Gold Symposium, Sydney - Event Review

I spent Monday and Tuesday at the Gold Symposium in Sydney and would like to share my thoughts on the event. Only limited time at the moment to do so, hence the writeup I have posted below is the same as the copy I submitted to AHA Investor magazine (which results in a couple of the references to this effect). Hopefully this is of interest to those who could not attend.

The Gold Symposium, some closing thoughts…

I’m writing this on the flight back to Adelaide having spent the last few days in Sydney for the second annual ‘Gold Symposium’. Unfortunately I’ve not even had the opportunity to let the presentations sink in before writing this follow up to the event. No doubt the abundance of information, ideas and views presented at this event will form the basis for a few blog posts which you are able to read for free at my website: www.bullionbaron.com. For now I would like to leave you with some highlights from the event.

Hosted on the beautiful Sydney Harbour in Luna Park, the event bought together some fantastic (world class) speakers as well as a swagger of gold mining companies for the benefit of investors. I’ve been to a few short investment seminars, talks and so forth, but never something of this magnitude, so I was looking forward to seeing how it would be bought together.

Funnily enough on my way through the entrance on the first morning I found I was having my photo taken by none other than the ‘AHA Investor’ Editor Mike Woodcock (neither of us knew it at the time having not met face to face until this event and not formally meeting each other until later that morning) who was simply taking some photos of delegates checking into the event. I wandered around downstairs for a while with plenty of booths to check out before everyone was called to the conference room for the start of the presentations.

Kerry Stevenson (Managing Director, Symposium) kicked off proceedings with a video introduction, backed by a very suitable track “Gold” by Spandau Ballet.

Unfortunately some technical difficulties plagued the first presenters, a presentation remote which refused to click through PowerPoint slides made things difficult, however David Evans (from Gold Nerds) made light of the situation and presented a fascinating look at our monetary and debt situation. David suggested we will see a return to the mean GDP/debt ratio of 150% from the 375% we sit at now (US/global basis). He predicts this will come from a more intense version of a 1970s scenario where we see high inflation (12% over 14 years, 2014 to 2028). While I don’t agree with the scenario and suggest a more destructive short term path is likely I commend him for being one of the few speakers to put some specific dates and figures to the audience. 

Short term David Evans sees Gold at $3800 in 2015 and much higher targets long term (although the high inflation will mean these higher nominal prices won’t necessarily be as spectacular as they sounded on paper today). David shared some insight on the global warming debate and then related it back to the precious metals market in that they are both a battle of the establishment versus the sceptics. He highlighted the importance of the internet in this battle, a tool which will be invaluable in the fight for sound money, bringing a theme (importance of technology in this precious metals bull market) which was continued by several other speakers during the event. David Evan’s talk was my favourite highlight from the event.

Second off the ranks on the first morning was Eric Sprott (founder of Sprott Asset Management and rock star of the precious metals industry). He bought some interesting quotes from historical newsletters highlighting just how accurate his predictions have been and how this has benefited the firm. He used the cost of FDIC bailouts on failed US banks to show just how insolvent the whole US banking system is. Sprott suggested that central banks are leasing their Gold to meet the extra demand being seen in the Gold market today. Anyone who has followed Sprott will know that he is even more bullish on Silver and is expecting a return to a 10:1 ratio with Gold (currently sitting around 50:1). He provided some compelling historical and current reasons this ratio will come back into play. A classic comment from Sprott on fiat currencies during the speech, “The dollar versus the euro, the yen versus the dollar… they’re all crap. It’s like, who’s the prettiest horse in the glue factory!”.

Louis Boulanger (LB Now Limited) followed a short break, with a grim look at the US Dollar situation, pointing out that it no longer has an absolute measure as it did when it was tied to Gold. We can’t solve a debt crisis with more debt and Boulanger suggested the situation might result in a global scenario where countries settle their trade deficits in Gold. Some interesting charts were presented showing just how orderly the current devaluation of the dollar to Gold is compared with times past where the price of Gold (relative to other countries such as the USD) was changed overnight (when the price was fixed). Also pointed out was that Australia is the lucky country being one of the few who are allowed to invest in Gold via their retirement accounts.

The day continued with presentations from many gold mining companies. First up was Les Davis from Silver Lake Resources (ASX:SLR) who advised the company was in fact celebrating its 4th birthday (from listing on the ASX). SLR’s plans for growth and expansion look impressive and if they can meet future targets then they will be one of the midcaps to keep an eye on. Other companies presenting over the course of the event ranged in size and scope, from the microcaps (such as Invictus Gold with a market cap of $3.6m and holding $2.1m cash) to some of the largest on the ASX such as Kingsgate Consolidated (ASX: KCN) who have a market cap over $1b and Alacer Gold (ASX: AQG) who have a market cap of around $3.3b.

Several of the companies who presented at the event were those which I have covered in AHA Investor in the past. Cobar Consolidated Resources (ASX: CCU) and Argent Minerals (ASX: ARD) both provided updates on their respective Silver projects. CCU is expecting to commission their plant at the Wonawinta Silver Project early next year (2012). It was disappointing to see Castlemaine Goldfields (ASX: CGT), another company I’ve previously covered in these pages, pull out from the event. Somewhat understandable given the trouble (grades not up to expectations) they’ve experienced with recent mining at the Ballarat Gold Project, however the opportunity could have been used as a platform to update shareholders with news on the situation.

Egon von Greyerz (Matterhorn Asset Management) bought a dire view of global economies (although in fairness similar underlying themes ran through most talks), showing how countries that can print their own currency (such as the US) can create an illusion that they are ok, when in reality they are in as poor a position as those countries currently falling off a cliff (Greece, Italy, Spain, etc). Egon suggested that the “Soup of Debt” can is getting too big to be kicked down the road and this will lead to the failure of all currencies.

Dan Denning (Daily Reckoning) presented an interesting view on how he believes social media (such as Twitter) accelerates instability by breaking news in a way that involves and immerses the reader in a much more personalised way than news reports of the same event.

Gavin Thomas (CEO of KCN) was last of the keynote speakers on the first day and presented a compelling case for investing in Gold miners or explorers who are in the ‘Rim of Fire’, a prospective geological structure in the earth’s crust where many of the world’s largest Gold deposits have been found.

The second day was just as packed and consisted of several more keynote speakers the first of which was Richard Karn (of The Emerging Trends Report) who suggested that to grow your wealth you would need to speculate. He looked at the opportunities available in specialty metals, those whose use is discovery driven (of new technologies using the metals) rather than GDP driven.

Alf Field came out of retirement for a once only speech to update his view on the Gold market and provide some price targets based on his Elliott Wave chart theory. A target of $4500oz for Gold in the next wave sounds very enticing. Although I don’t personally subscribe to such charting methods (EW), his previous predictions have proven relatively accurate and he provided some interesting background to his reasoning for using this charting method to predict how high Gold could go.

A high level speech from Ben Davies in the afternoon provided some insight into how Gold might be integrated with advanced payment systems, merging Gold and technology to once again return to a sound monetary system.

John Embry (a colleague of Eric Sprott) provided some interesting background on where he’s come from. He provided a riveting talk on manipulation of the metals. Not a topic we see eye to eye on, but interesting nonetheless and certainly a crowd pleaser.

The event was great overall, but there was certainly room for improvement next year. At a minimum I would like to see a better AV setup (some technical issues such as PowerPoint remote not working, no red showing on presentations and crackly microphones did detract somewhat), an increase in the amount of Australian based content and economic keynote speakers would provide a better local perspective and perhaps even a precious metals bear thrown into the mix of speakers would provide some much needed balance to the ‘buy buy buy’ view that was presented.

I enjoyed the event and will certainly consider another visit to Sydney for the event next year which is expected to be held during September (2012).

Bullion Baron
www.bullionbaron.com


Here is a quick snapshot from my phone during the final panel discussion where Sprott, Embry, Davies and von Greyerz took some questions from the crowd:



BB.

 Buy bullion online - quickly, safely and at low prices

5 comments:

  1. How dare you publish my shiny scalp.
    Gold_Cranium

    ReplyDelete
  2. Haha! There's more than one in the picture there so we can't be sure who it is commenting :)

    ReplyDelete
  3. Great symposium!
    Can only get better.

    Bert
    Researcher
    goldnerds.com

    ReplyDelete
  4. "‘buy buy buy’ view that was presented"

    This symposium is an offshoot of the Gold Standard Institute which had Antal Fekete as the keynote speaker.

    Kind of a shame that is has become a sell fest with the likes of Sprott. Kid Dynamite - http://kiddynamitesworld.com/ has a view on Sprott you might be interested in reading.

    This spruiking by gold 'miners' irks me too. In general (I realise there are exceptions), their share prices have performed abysmally, despite a rising gold price. The reason is because they are "holes in the ground with a liar at the top & a fool at the bottom". Few actually deliver on their promises, I should know, after buying at what I thought would be a 'once in a lifetime' opportunity at the end of '08, I'm left in no better position than if I'd left my money in the bank, pathetic.

    ReplyDelete
  5. Castlemaine Goldfields is a perfect example of what I'm saying. It seems grades are almost never up to 'expectations' (read pulled out their arses). Even then this is often couched in vague & obtuse language such as "de-risking".

    ReplyDelete