Gold Stocks Are Undervalued | Imaru Casanova (VanEck Fireside Chat #4)

Very happy to welcome for another Van Eck fireside chat, Imaru Casanova, portfolio manager, for gold and precious metals at Van Eck. Very fitting because Van Eck has a history in gold, the first to set up a publicly traded mutual fund in 19, 68. Imaru, great to see you. Welcome forward guidance. Thank

you, Jack. Thank you for having me.

It's a good time. Gold prices are going up, as I'm sure you've noticed. Over the past year, they're up, around 30%. To what do you attribute to this new bull market in gold?

The setup has been right for gold for a while in in my view. As gold is viewed as a as a safe haven, no doubt the recent geopolitical tensions around the globe have no doubt been supportive of gold. Gold has also been strongly supported by central bank buying. And that, again, we think has been a strong central bank buy and began in 2022, really in the 2nd part of 2022 after the invasion of Ukraine by Russia. And we think Russia's experience with their reserves informed other central banks. And no doubt that has translated into increased central bank buying in the last couple of years, record

How much do you attribute gold price movement to the movement in interest rates? The general traditional view that rising interest rates, particularly rising real interest rates, are negative for gold and that a fall in real interest rates are positive for gold. Interestingly, the rise in real interest for from 2022 2024, gold, you know, did not go down as much as people thought based on that model, and now the real interest rates are looking to go down. And in September, the the Federal Reserve is set to begin cutting interest rates. How does that shape your your outlook?

Yes. No. It's a great question. And one we get asked often because you're right. The idea is lower real rates are gold positive for the obvious reasons. You know, gold doesn't pay an interest, so the opportunity cost of holding gold increases when interest rates are higher. The question is always, what what's happening? You know? Interest rates have actually you know, the the Fed embarked in a tightening program and actually halfway through that, really, that cycle, gold sort of took off. And it's interesting because we highlighted that at the beginning of the tightening cycle, we said, look.

you. Right? Yeah. For for our audience, so inflation is falling, and inflation expectations are falling but less than inflation. And nominal interest rates are falling by more than inflation expectations, so that's why real interest rates are going down. So, Amara, we we could talk about just the price of gold, its its drivers, its investment use case for a long time. But what I really wanna know is how to invest in gold stocks, so primarily, gold mining companies, but also gold royalty companies, which is a slightly different business model because those they have a different investment retur

So I'm actually an engineer by education. I went to Case Western Reserve University and got a bachelor's and master's degree in mechanical engineering. I built this super duper test rig that was trying to test failures in rotating machinery so that with our tools, we could predict that failure and avoid it. So we were funded by power generating companies. A lot of fun, very interesting, very hard. And then I'm Venezuelan, originally. I was born in Venezuela. I came to the States when I was 16 to go to college, became a mechanical engineer, did go back to Venezuela, and, actually, probably not

That's that's an incredible journey. And, yeah, I'm glad you said that. So you are involved on the active inves