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Gold Is Best Bet Against "Currency Destruction"

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(Kitco News) -  Investors, especially in Europe, should be stockpiling gold now to protect themselves against currency devaluation, said Frank Holmes, CEO of U.S. Global Investors.

“What’s also interesting is why gold’s above $1,300 [an ounce] is seeing the amount of debt that’s offering negative real interest rates, it’s $9 trillion,” Holmes told Kitco News.

Holmes said that the issuance of low-yield or negative-yielding debt, especially in Europe, is “currency destruction.”

On the mergers happening in the mining space, Holmes said that much of the consolidation is happening out of necessity, due to a dwindling of reserves.

“I think you get these smart guys who understand this thesis that there’s peak gold, and [reserves] are very hard to replace, so you’re going to get these mergers that try to maintain their status quo,” he said.

His comments come as Newmont and Barrick have agreed to a joint venture project in Nevada instead of a full merger.

“It’s called peak gold. They’re scrambling to try to maintain; they can’t replace. Just think of Nevada. Those two companies, when they put their joint venture together, will produce 4 million ounces a year. If they collaborate and drive down their costs they can maintain those 4 million ounces a year,” he said.

Holmes added that the highest growth in the mining sector would come from mid-cap and small-cap companies.

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