Geopolitics – Often a Risk for Gold Mining Companies

May 2018
By Joe Foster, Portfolio Manager and Strategist, VanEck

According to an old prospector saying: “Gold is where you find it”. Many of the companies have found it in very out-of-the-way places. Not next to a highway in Ohio, but near a glacier in British Columbia, in the Andes Mountains at 14,000 feet above sea level, or 10,000 feet underground in South Africa.

Gold is also often found in places with geopolitical risk. Geopolitical risk comes in various forms at the national, state/provincial, and local levels. The most common risks at the national level are changes in taxes or royalties and import/export restrictions. At the state/provincial level, there are risks of legislation that might make mining prohibitively expensive. At the local level, disgruntled groups may blockade an operation and unions sometimes engage in work stoppages.

Gold (USD)

Source: Bloomberg 

For investors to be comfortable with their gold mining investments, company managements need to mitigate, if not eliminate geopolitical risk – wherever it may be.

About the Author:

Joe Foster has been Portfolio Manager for the VanEck International Investors Gold Fund since 1998 and the VanEck – Global Gold UCITS Fund since 2012. Mr. Foster, an acknowledged authority on gold, has over 10 years of dedicated experience in geology and mining including as a gold geologist in Nevada. He has appeared in The Wall Street Journal, Barron's, and on Reuters, CNBC and Bloomberg TV. Mr. Foster has also published articles in a number of mining journals, including Mining Engineering and Geological Society of Nevada.

The article above is an opinion of the author and does not necessarily reflect the opinion of MV Index Solutions or its affiliates.

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