Value Investing In Gold Miners

During his recent interview on The Acquirers Podcast with Tobias, Sean Fieler, CIO of Equinox Partners discussed Value Investing In Gold Miners. Here’s an excerpt from the interview:

Tobias: How do you come to be interested in precious metals and hedge funds?

Sean: Well, I see, I started in this business in summer 1994 and been here at Equinox Partners full time since 1985. We’re better business value investors and we’re better business value investors in a 25-year period where there’s been some really significant cycles. But generally, we’ve seen financial assets, pricing ever upwards and we’ve seen stocks and you certainly see that today trading net valuation that are hard to reconcile with the value investing approach.

So, what we’ve found is that there are niches, there are areas where investors aren’t for a variety of practical or ideological reasons. And that by taking our better business value investing discipline and applying it in areas where most other investors are comfortable or familiar don’t know, we’ve been able to generate good returns and take advantage of a lot of the inefficiencies out there and not get caught up in what I think is now at today of very broad base financial mania both in stocks and bonds really across almost the entirety of the developed world and a large fraction of the emerging world.

Tobias: There’s a chart that does the rounds on Twitter every now and again and probably more broadly, but it shows, it could be the [unintelligible [00:31:35] take your pick of whichever index you like and they compare it to the price of gold or to commodities. And so, it shows on occasion that the index gets very cheap in gold terms, in which case, you should buy the index. The index gets very expensive in gold terms, in which case, you should be in gold. Every time somebody posts that, somebody else points out that that’s a chart crime. I’ve never been able to figure out what’s exactly wrong with that chart, but do you have any view on the usefulness of an approach like that?