Prominent gold commentator John Hathaway appeared on the second day of The Northern Miner's Global Mining Symposium. In January, after 22 years at Tocqueville Asset Management, the veteran investment manager moved to Toronto-headquartered Sprott Asset Management (TSX: SII; NYSE: SII), where he is now senior portfolio manager and managing director.
Hathaway spoke with Dean McPherson, head of business development for the TMX Group, who opened the discussion asking how long the current gold bull market would last.
"The message I'd like to convey is that it's still early days," Hathaway answered. "I don't see why gold couldn't double in price."
Hathaway went on to outline his perspective that it's a brand new world for the precious metals mining sector, and while no one can say for sure how it will play out, he remains very bullish on gold.
At Sprott Asset Management, which began trading on the New York Stock Exchange in June, there is roughly US$17 billion in assets under management (AUM), with stronger gold and silver prices helping to increase the value of those AUMs.
When McPherson mentioned the news from August that Warren Buffett was buying up some US$565 million worth of Barrick Gold (TSX: ABX; NYSE: GOLD) shares, Hathaway reminded him that the billionaire U.S. investor has long disliked gold - until now.
"Buffett, we know, is on record about hating gold," he said. "I think that's quite a statement in terms of where gold stocks are [now]."
Nevertheless, Hathaway told the audience that he finds it surprising that many are still hesitant to enter the market.
"They're doing great," he said in reference to gold miners. "Their earnings are going up, and yet investors are still on the sidelines."
With the gold sector generating huge volumes of cash and many companies raising their dividends, Hathaway said he's pounding the table and ready to "grab investors by the lapels" to get their attention on the issue.
"What if we go to US$3,000 [by early 2022], which is what Merrill Lynch just said?" Hathaway pointed out.
McPherson then shifted the discussion to the junior mining space. Though the explorers have been struggling for a while, he asked his guest how he looks at these smaller companies.
"We do invest in small-cap companies, many on the verge of becoming producers. [But] we tend not to invest in the sub US$100 million, even sub $200 million cap companies," Hathaway explained. "I'm a big fan of the junior mining space. When we start to see more capital returning to the mining side of the equation, because the performance has been very good, and because the upside is so great, I think the small caps will do good."
He went on to relate that Sprott has a tremendous outreach into the junior mining space, and remains very interested in that part of the precious metal mining community because the potential performance within it is significant.
McPherson then shifted to gold's often overlooked sibling, silver.
"Silver is gold on steroids," Hathaway replied, who, again, wondered why some people have been put off by the commodity's price run-up in the last few months. "If gold can go to US$3,000 [per oz.], silver could revisit its previous high."
While he described silver as having a more speculative flavour to it, Hathaway said Sprott owns "companies with silver exposure right across the board."
McPherson also asked Hathaway about his opinion of the mining industry's governance issues, coming from decades of observing it.
Hathaway's reply was blunt: "Having observed this industry for 25 years, I still think it has a long way to go in terms of governance."