Imagine if the miners hadn't converted all that gold to cash - David Baker on missed opportunity

The gold miners should show some conviction in their product and hold more of it on their balance sheet, said David Baker, managing partner at Baker Steel Capital Managers.

Last week Baker spoke to Kitco Mining at the Gold Forum Americas/XPL-DEV 2024 in Colorado.

Baker advocates for gold mining companies to hold onto some of the gold they produce rather than converting it all into cash. He argues that this strategy would better align with the companies' messaging about the long-term value of gold as a hedge against fiat currency depreciation.

"Holding a bit of gold...send a message to the investors: they've got confidence in the product," said Baker. "Gold is an asset that basically should protect your purchasing power. [We are] already seeing gold starting to outperform inflation...so I think it's a reasonable place to start holding gold."

Gold's strong performance this year could trigger a "capital rotation," said Baker.

"If the trend continues, it's going to be very hard for investors not to buy gold," said Baker.

Baker emphasized the importance of capital management for mining companies, particularly those generating significant cash flow. His focus is on larger companies, typically above mid-cap, that balance growth with capital returns, which he considers the "holy grail" of investments.

Coverage of the Gold Forum Americas/XPL-DEV 2024 is sponsored by Metalla Royalty.

0:00 - Resource investor confidence
1:21 - A top for the resource sector?
4:36 - Gold miners holding more gold
7:05 - Gold protecting wealth
9:22 - Capital allocation at the miners
11:08 - Returning capital to shareholders
12:28 - Capital discpline
13:16 - Year ahead

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