TGF has generated positive attribution of 8.4% from a ~25% net long exposure to gold equities in the calendar-year-to-date.
During this period, the gold price reached an all-time high of US$2,526.59 per ounce on Monday, 26 August 2024, driven by strong physical investment demand from China in particular, as well as other central banks globally. In our view, it has the potential to push higher as real rate headwinds reverse.
Gold equities, however, have lagged. Poor operational execution and persistent cost inflation has seen miners underperform the underlying commodity by 40% since 2020. This gap can be retraced as they rebuild trust with the market, realise margin expansion and resume cash generation. Feedback from the recent Diggers & Dealers Mining Forum suggests this is underway. We are looking to affirm this during this reporting season as well as at the Denver Gold Forum and Precious Metals Summit in the US later this year. Falling exploration activity, strong balance sheets and attractive valuations suggest M&A may catalyse this catch up.
Portfolio Manager, Ben Cleary, discusses below the gold market fundamentals, equity underperformance and the case for a catch up. The Tribeca Global Natural Resource Strategy remains materially exposed to high quality gold producers, developers and explorers – including Newmont Corporation (NEM-US), Northern Star Resources (NST-AU) and Spartan Resources (SPR-AU) – which will provide diversified torque to this thematic.
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