Earlier this month, I attended the opening ceremony of a gold mine in Mexico, along with the governor of Guerrero state, several federal cabinet ministers and the chairman and the CEO of Torex Gold Resources Inc., the company launching the mine. I’ve been investing in commodities for many years, and my focus has always been on high-quality assets run by high-quality people. For me, Torex fits the bill.
With ongoing mentions of negative interest rates policies (NIRP) in the media, we’ve received questions around how these policies may affect the investments in our global funds. Here is a brief look at our view and positioning around NIRP and our investments in Europe.
When oil is trading at US$20–US$30, many energy companies are not profitable. When oil prices are that low, companies are operating simply to cover their cash costs – it can be very costly to restart a stopped oil well and companies stand to lose less money by continuing to produce, rather than ceasing production altogether.
At the end of 2015, the market was trading close to full valuation making it difficult for us to find new investment opportunities at attractive prices. The steep sell-off in early 2016, however, has provided us with opportunities to capitalize on the downturn.
In a recent Bloomberg article, Research Affiliates LLC called emerging markets (EM) “the trade of a decade.” The article noted that long-term investors are currently presented with an “exceptionally cheap” opportunity, as the MSCI Emerging Markets (EM) Index has declined 30% over the past three years.1
I have spent my investing life evaluating the culture of innovation at companies in different industries. Innovation is necessary in every industry – but naturally more urgent in some than others. Because I seek out sustainable growth through innovation, I tend to hold a number of businesses in leading-edge industries – biotechnology, for example.
Currency hedging is not without cost, particularly given the volatility in currency markets. We do not make currency calls or forecast the path of the Canadian dollar relative to the fund’s currency exposures.