US Global Investors CEO Frank Holmes: How To Profit From Hedge Fund Manipulation In Gold Stocks
Published in August 29, 2013on
Frank noted that at the conference, "I'm going to comment on the state of the union on resources, and what the demand drivers are as a whole---the bigger picture, [as well as] the negativity that's focused around China, and try to highlight some of the positive aspects...I'll also comment on what's taking place in India [right now] when it comes to gold, which is important to understand."
Frank also spoke to the importance of India's marriage season in terms of the gold market, referring to it as, "'The love trade'--which is 50% of all the demand for gold, and that starts every summer and runs to Chinese new year." He added however, that, "I think gold would be substantially higher if you didn't have the weak policies coming out of India [right now], trying to stop the demand for gold...I will [also] comment on that."
Of great interest to investors looking to profit from the still-broken resource capital markets, Frank explained there are great gains to be made for example, "When stocks get pushed out of the GDXJ...rogue hedge funds know if they push it down [the company] one day in a quarter, below a market cap of $75 million, it gets pushed out [of the index]---and then they lean-in shorting it." The result he added, is that, "Some of those stocks become [of] exceptionally attractive value, because they're basically forced down...So how do you turn that into a positive? That's what I'm going to highlight [in Toronto]."
As a final comment to investors considering the sector, Frank suggested looking for, "Companies [that] have good CEO's, good geologists out there exploring, or very cost conscientious executives who are running an operation..They're the companies you have to really focus on," he concluded.
Once again, this was a fascinating interview with one of the world's leading voices in the resource market. Frank Holmes' upcoming speech at the Toronto Resource Investment Conference should not be missed.
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Photo source, Lallo Photography.