Make Kitco Your Homepage

The gold sector is relatively small, but that can be a positive

Kitco News


Technology giants dwarf mining giants, but that can also benefit investors, said Yamana Gold's (TSE:YRI) executive chairman, Peter Marrone.

On Friday Marrone recorded Kitco Roundtable with Mining Audiences Manager Michael McCrae, Editor Neils Christensen and Kitco correspondent Paul Harris.

The largest gold miner, Newmont, has a market capitalization of $44 billion, compared to Apple's $2.57 trillion valuation. Fractionally, Newmont is 1.7% the size of Apple.

Tech companies have also been attracting more investors. The Nasdaq Composite is up 22% year to date. The VanEck Junior Gold Miners ETF is down by nearly the same amount over the same period.

Give the gold sector time, said Marrone.

"Vacuums have to get filled. The broader investment community has to say: 'Where do I go to put my money?' And if the broader market is trading at 13, 14, 15 times cashflow and precious metals companies are trading at four to five times cashflow, I think it'll find a home. That's where the money will go," said Marrone.

When favor returns to precious metal companies, any cash turned on the sector will have out sized impact due to the gold sector's relatively small size, said Marrone.

"In some respects, I believe what's holding the sector back .... is relevance. Is it relevant to the broader investment community when everything else is doing well? But when everything else is so big by comparison, that's also the positive."

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.