Jim Mellon: Bullish on
Gold & Silver
Issue 114, February 2015
...down the price to put the little ones out of their misery.”
He also warns that the components of China's GDP do not add up to its reported growth rate of 7.4 per cent in 2014. “I think the real rate of Chinese growth is less than 5 per cent at the moment and a lot of Chinese expansion was unproductive investment, which has to work it's way through the system.”
Mellon, who earned his reputation as a rowdy Hong Kong-based fund manager in the 1990s, trading everything from Russian utilities to Hambros Bank, repeatedly cites “good luck” in his apparent ability to time the cycle's sharpest moves, as well as compulsive reading.
“I read everything,” he says. “I subscribe to dozens of magazines, every newspaper, every broker report that comes across my desk, so I'm full of information. A lot of it may be useless, but it gives me an idea of what's happening.”
His favourite publications he says are Gavekal Dragonomics and MacroStrategy Partnership, two freethinking economics websites.
Gold & Silver
Mellon's current mining investments include Toronto-listed Critical Elements, a lithium developer valued at C$23m ($18m), and West African Minerals, which has been “a roundtrip.” He is most bullish on precious metals however, owning 10 per cent of Nicaragua-focused Condor Gold.
“All this printing of fiat money will at some stage generate inflation,” Mellon says, expecting gold prices to hit $2,000 per ounce in the next few years and silver prices to triple. “We don't know when, but in the meantime, things like the Swiss National Bank kicking away its peg to the euro creates uncertainty and gold does very well in uncertainty.”
Jim Mellon's primary focus however has shifted from mining to biotechnology, where he has invested “a few hundred million dollars” in the last 3 years, buying a flat in San Francisco, the world's biotech hub.
“It's a bit like mining actually,” Mellon observes, “because there's a high failure rate, long lead times, high capital investment, lots of uncertainty and government interference. But the payoffs can be enormous.”
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