Gold stocks to see rapid, severe accumulation

Their advice on capital flows, regional synergies and mine financing likely will change as many or more balance sheets -- personal and corporate -- as the multibillion-dollar Voisey’s Bay discovery of nickel did 15 years ago.

I’ve spent six months working on this story, one that involves large sums of money, CEO connections, sovereign funds and Canadian ingenuity applied across two of the world’s least understood commodities: gold and publicly-traded gold miners looking for greater investor recognition.

First off, the following quote is not from one of the two principals who intend to launch Operation AU (my code word, not theirs).

The following quote, coming today (Thursday) from a very fine conference call, comes from the CEO who runs commodities and Asia-oriented mutual funds manager U.S. Global Investors (NASDAQ: GROW) in Texas.

“Gold stocks appear undervalued relative to the gold bullion price,” Frank Holmes, a longstanding fund manager whom I consider a colleague and trustworthy source, told us in a lengthy presentation about commodities, infrastructure spending and emerging markets, largely China, India, Thailand Singapore and Indonesia.

Mr. Holmes and a Texas team of oscillating quants and world travelers run more than $1 billion of money across at least 13 funds designed mostly for individual investors. His team, prominently Romeo Dator, co-manager of the China Region Opportunity Fund (USCOX), today also speculated about China condominiums (bullish), jobless blues among ordinary folks who were making less than US$50,000 a year (deflationary), copper, coffee, currency swings, the nation of Colombia and the globe’s volatile food prices.

Frank Holmes, in the presentation he and his Romeo Dator shared with us Thursday, flashed a seasonality slide on gold prices that I believe will hold true in glorious fashion late this summer and early this autumn. If you are fortunate, you can click here and retrieve most of the U.S. Global Investors presentation.

The seasonal rise of gold prices, as charted in five-year, 15-year and 30-year patters (seen here), almost always begins in late August or early September. I dwell on this for the positive influence it will have on the plans of those two men mentioned up top of this free article.

Prepare for a long sentence, friends: As bullion’s price resumes what resembles a multi-year elevation in purchasing power across continents and paper currencies, newly-merged gold companies that are undervalued when stacked against the overall stock market and the bullion price will undergo severe and rapid accumulation.

Sovereign funds and Asia-linked private portfolios of great size almost surely will lead the buying of these newly-engineered equities. And this gets us back to Operation AU (or Hey You).

The “new equities,” if this capital engineering of undervalued gold miners is successful, could dominate the next melt-UP of gold miner stocks. “We do believe that whenever you have negative interest rates … then gold performs well against U.S. dollars … (because of) the deflationary cycle,” Holmes, who is not connected to plans for the golden roll-up that is in the works, told us today.

Mr. Frank Holmes and his team Thursdau, er, I mean Thursday, also spent a prolonged Sherlock moment detailing the who-dunnit? decline of gold mine supplies, exploration and activities. Gold is getting hard to come by these days, thus putting Indians and other gold loving peoples into scramble mode for bracelets, rings, necklaces and brooches during their festive wedding seasons.

As for Operation AU, I’ll present the scoop on the two-man project in Ticker Trax, our subscription wealth service for paying subscribers. This one will be an eye-opener and, we believe, a wallet builder – mirroring our profitable life sciences and silver/gold/specialty metals research in Ticker Trax. I hope that those among you who are qualified to be diligent investors can find time to subscribe to the service, which is now in its eighth month.

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THOM CALANDRA of Ticker Trax helps his audience find value in a quagmire of investment choices. Thom co-founded CBS MarketWatch and MarketWatch.com. As the voice of Thom Calandra's StockWatch and The Calandra Report, Thom pegged $300-ounce gold as a long-term hold.

HOLDINGS: Thom’s holdings are listed for all Stockhouse members on www.Stockhouse.com under the “portfolio setting” for user TCALANDRA. It is public and free to view. He and his family own recently minted gold and silver coins. He does not own and has never owned Canada Lithium Corp.

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