Ian Ball, Rob Phillips: Markets are Robust, Gold is in a Window of Strength

by birtanpublished on August 25, 2020

i'm charlotte macleod with the investing news network and you're about to watch my interview with ian ball president and ceo of abitibi royalties and rob phillips managing director nasdaq global

Corporate client group in the discussion ian shares his thoughts on where the gold market is at and rob gives his perspective as an exchange representative we hope you enjoy let's jump into our

Questions the first thing that i want to do is give the audience a little bit of context on why the two of you are here together today so ian i hoped you could start off by

Explaining abbott to be royalties relationship with the nasdaq what the listing there offers to you as a company sure uh when navitivity was started we were on the tfx venture

And so we were looking for ways to access the us market but being a relatively small company there's a huge burden uh typically associated with listing you know outside of canada and so we had

Conversations with uh with nasdaq in particular rob who's with us here today about the nasdaq international program that allows you to have the sponsorship of the nasdaq uh while you are an otc

Listed company in the united states but it does show that uh there's a bit of a branding exercise and a credibility factor being associated with the nasdaq

When you're in the united states and it allows us to access the investor market but without the additional burden of a full listing perfect and from rob i wondered if you could give me

Just a brief breakdown of the landscape of companies that are listed on the nasdaq in particular if you could explain how mining companies fit in there yeah of course and actually i'll pick up where you

Left off too so abby tibby is one of our nasdaq international designation of members so this was a solution that we implemented a number of years ago for companies exactly like ian had said who are

Uh traded over the counter in the u.s um are headquartered and listed on or on their domestic exchanges but didn't want to go through the regulatory burden of a u.s listing so this is a solution that we

Put in place where companies can avail themselves of the branding exercises you mentioned uh and the access so i can start with the global part of nasdaq we are known for listing companies

In fact nasdaq has evolved over the last 25 years into a publicly traded ourselves international financial technology solution provider and at the very core what we do

Is the listing exchange so right now we list approximately 3 000 global companies that are listed in the us and on the nasdaq exchange and we consider them to be the innovators of the world and they are

Also from our standpoint sector agnostic so where's we're known for listing the largest of the technology companies in the globe in fact

Even the nasdaq 100 includes what we would consider to be tech the traditional sectors um if you're an innovator this is the exact change where you belong and we're thrilled with our partnership

With that tibi and consider again the international designation to be an opportunity for us to start the right kind of conversation to support our companies at their right point in their life cycle

Perfect thank you so much for that ian i'm gonna go back over to you and ask you a little bit about what's going on with gold right now when we spoke earlier this year we were

Kind of having a discussion around what is the fair price for gold right you you mentioned a range of 1750 per ounce on the low side 24.50 on the high side gold is within

That range right now and i wondered what do you think of that do you have an updated range you're looking at do you still feel that's a good place for it to be well i think that the range

Generally is still quite applicable on the downside you know that 1700 number seems to be you know fairly solid uh gold had a hard time getting about that 1740 1750 it had consolidated there for a

Number of years a number of months back in the spring so i still think that's sort of the downside window when you look at the upper end of the spectrum uh you could

Probably move that up a little bit you know from the 2400 perhaps up to 25 2600 and the reason why i would say that is there always has seems to be a strong correlation between

The gold price and the u.s debt and when gold has been in a in a bull market if the u.s debt was uh if you go back to 2000 and uh 2012 you know the u.s

Debt was uh 15 trillion and the gold price traded at 1500 and that correlation stayed together for about 10 years during the last run-up and so if you were to apply that today

The the u.s debt right now is 26 and a half trillion moving up to 27 trillion so that's why i think we can move that upper band just just a little bit just because of the deflation or not i would

Say deflationary the uh the dilution or the devaluation of currencies that we're seeing around the world and hard assets are obviously appreciating so gold is definitely one of those and i

Still think we're generally in that that broader range that we spoke about from earlier this year right and i do remember that u.s debt was a factor that you'd mentioned are there other elements that you're

Looking at when you look at where the gold price may go from here yeah definitely so if you look at historically when gold has done well is when the u.s government runs uh increasingly large

Uh annual deficits and you know what number do you want to use right now the official number is right now 2.8 trillion annual deficit this year under the old method of accounting for

The deficit it's now over 4 trillion it's been changed now i believe because of the accounting parameters that the u.s government uses but each you know each year that deficit goes

Higher or years a very high deficit the gold price does well if you look at some of the years under the obama administration they were able to reel back the the deficit after 2012 and gold did

Quite poorly for uh for us a stretch there about eight years but right now it shows really no signs that that you know the annual deficit is

Going to be reduced in the near term so i think gold has a window here that it will continue to be quite quite strong okay and rob i want to go back to you for the next question

With gold on the rise what are you seeing from your perspective at the nasdaq i know you work with a lot of companies is there an increase in interest from gold companies enlisting with you

Or any other dynamics that you're noticing right now you know i can start with the capital markets charlotte because very much in our dna is we provide robust and

Liquid capital markets to transact financial instruments so in nasdaq's trading side of the business what we support is we own 30 exchanges globally that trade any one of a number of

Financial instruments uh what we're seeing are liquid and robust uh markets and it's our job to be if you will uh neutral connectors between buyers and

Sellers and to do it in an efficient way into it to enhance and facilitate the price discovery so we're encouraged by what we're seeing in terms of participation

Uh across the breadth of the capital markets yeah in terms of the resource companies again we are completely agnostic about the uh about the business that the companies are in if these are companies

In good standing that have great businesses then we want to have a conversation about where we can support them regardless of their life cycle and then charlotte one other thing i thought i'd add to is

Given your canadian uh audience as well canada is a very significant focus for us at nasdaq people don't realize but we actually own an exchange in canada that trades about 20

Of the equity volume of tsx listed companies up there no listing business but it's a great one for us and i've had the privilege of hosting your governor general uh provincial premiers the ambassadors

And i worked very closely with the with the new york consul general to support all of the canadian businesses and canadian initiatives that's great and you know you mentioned connecting companies and investors

Would you say that interest in what's going on in gold or in the mining space in general is being reflected in investors right now you know we hear a lot about

Generalist investors coming into this space as maybe you can comment on that i what we do see again in our neutral position is uh participation in across the spectrum of investors so

We're seeing encouraging signs of institutional as well as individual investors and they're they're delivering if you will the volume into the markets that we're

Happy to cut to support okay that's great ian i know this is an exciting time for gold but gold mining companies have definitely faced challenges this year

Due to covet 19. as we start to see q2 results come out what's your sense of how gold companies are weathering the storm and i know you yourself at avid tibi earlier in the

Year you said it's it's really been fine for you so maybe you could shed some light on that too well right and i think what you're seeing is the industry has dynamics you

Know has coped quite well with with covet and i think that's one one of the reasons for that is just due to the safety protocols that mining companies already have

In place that they're used to having procedures to ensure that the employees are safe so adding another layer in there for covid isn't necessarily a new concept for for mining companies i think you know their

Ability to ramp down uh make sure that your employees were safe and ramp back up just kind of shows you the industry is you know very uh you know proficient in employee safety in terms of how

They're gonna weather this or what we're looking at in that in the quarterly earnings if you if you look at the gold industry today versus 2012 you know the price of gold is roughly

The same at 19 20 announced but the biggest factors we have going for us today is the oil price is about half or a third of what it was in 2012 you know oil at 150 versus oil at

40 to 50 a barrel and obviously oil and energy is a big cost component of these miners but the second thing i'd also look at is the the currency the last time that gold reached 1900

U.s the canadian us dollar were trading at par so it means the canadian gold price was also 1900 where today it's at 25 26 up to 27 hundred dollars

An hour so to be a canadian miner and have the currency where it is relative to the us allows you to control costs a lot better than 2012 all this relates into greater margin expansion

Today than what we had eight years ago despite the price of gold being exactly the same so i think people have obviously learned from the past mistakes and we're having things besides our

Control as i mentioned oil energy prices and currency that are acting as a tailwind for the industry okay thank you for that rob as we are finishing up here i want to ask if you have any final thoughts that you would

Want to share with the audience be it investors or companies about what you see in the environment right now thank you so it's a great question because i was going to follow up on what dean is saying just to emphasize

Uh it's a great a story that uh that he's telling us there's a lot of compelling stories to be told i'm out there and that's something that we're observing across the the entire spectrum of market

Capitalization and of companies businesses uh and we're thrilled with the opportunity like this to support companies as they're getting out there and engaging with investors to tell

Those stores well that's great and ian were there any final words that you would want to share sure and i don't know if uh if berkshire hathaway bought their barrack shares through an

Affiliate of the nasdaq but i think it's i think it's really important to point out that you hear you have uh when the most respected investors of all time making their force forte into the gold mining

Sector and i i thought it was quite encouraging that uh you know berkshire didn't buy gold or a gold etf or an index of gold mining companies but they're making a very specific

Bet on one of the world's top two largest gold miners there's still some debate who made that decision inside of brookshire whether it was warren buffett or one of his deputies

But i would say that is a very it's a very large endorsement for gold going forward and for the miners and having the discipline to allocate capital in this environment so i i think that shouldn't

Be lost on the investment community okay well i think that's a good place to finish up thank you both for being here today to talk about gold in the markets it was great to have you thank you for

Your time today great so once again i'm charlotte macleod with the investing news network and this is ian ball and rob phillips

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