CENTAMIN's operations in Egypt. "It's an extraordinary business," Slater says, "when you have to shift a tonne of earth to get half a gram of gold."

CENTAMIN's operations in Egypt. "It's an extraordinary business," Slater says, "when you have to shift a tonne of earth to get half a gram of gold."

Jim Slater: Equites are on a 'Knife-Edge'

Issue 19, November 2012

Global equity markets are perched on a “knife-edge”, says investor Jim Slater, speaking exclusively to Global Mining Observer.

Europe’s troubles he believes are only a sideshow to the dangers posed by the US Federal deficit. America’s overseas creditors will eventually realise that “the best they can hope for is to be repaid in much depreciated American dollars.” In turn this will prompt a “tipping point”, beyond which investors will definitively prefer gold to government bonds. “I’m very bullish on gold,” he says.

Jim Slater shot to fame in the 1960s whilst working at British Leyland, writing the Capitalist column for the Sunday Telegraph under Nigel Lawson, then the newspaper’s City Editor. As chairman of Slater Walker, he rewrote British takeover practice and in doing so, largely reshaped British industry.

Slater is confident that quantitative-easing and the pressures that have driven gold prices higher will continue. Politicians have entered a can-kicking mode, “not letting anything happen on their watch.” Money-printing is therefore the “easy option”, he says.

In recent years, Slater has invested keenly in the mining sector. His mining vehicle Galahad Gold, founded in 2003, made annualised returns of 66 per cent before returning money to investors at the height of the mining boom in February 2008.

“My most important single criteria is safe political territory,” he explains, citing London-listed miner Centamin, which on Tuesday lost its operating permits in an Egyptian court ruling, as a troubled example.

Toronto-listed New Gold, due to report results this evening, is a better instance of where he believes investors should look to position themselves on the mining “food chain”, with a balance of production, cash flow and development upside. The company is valued at C$5.2bn ($5.2bn), with operations in Canada, Australia, Mexico and the US.

Whilst an outspoken proponent of gold, Slater remains more phlegmatic about gold mining in general. “It’s an extraordinary business,” he says, “when you have to shift a tonne of earth to get half a gram of gold.” As he wrote in his autobiography, Return To Go, “Why ruin a good gold mine by drilling a hole in the ground?”

“My most important single criteria is safe political territory.”

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