Gold...are you ready for a rebound?

0:00Hello and welcome to the Australian's Money Puzzle Podcast. I'm James Kirby. Welcome aboard. You know, just about every listener to this show either has gold or has considered gold and maybe you missed the last rally when it went ballistic basically in late 2025 and earlier this year in the mid-year it has been drifting throughout the year and actually had been dropping for some time. Then in August are we so about is this a rebound or better still you know maybe this is a moment you could gainfully tap up or get involved for the first time. So up to you my guest today is Cameron Judd. He is the fund manager at the Victor Smorgh and partners resources gold fund. It's a six-year-old fund produced a mighty 18% TA returns since it commenced in 2020.

1:01Though obviously this year not looking as good as that obviously in mid-year there was that soft patch but we're going to talk about gold and we're going to talk about gold mining stocks. Both. How are you Cameron? I'm very well thank you James and Nostobahey. Nice to have you on the show. I've talked to both gold mining specialists, bollion specialists, depending and I like the fact that you do both. Though actually the amount of pure gold you have in the fund is really quite small. It's mostly mining stocks right? Correct that's right. That's what we think we can get the leverage on the gold price which we are positive on. Yes yeah well I would expect you to be. Though I'm sure this time it's where you can't be but okay so let's just start on gold because I think most of this was with no you know this amazing period and it did one of its extraordinary rallies but very broadly of course pair and every year it's quite a good return gold itself in whatever form you have it over a long period of time. Very roughly it bots the number is it eight or nine percent TA? The bed 9% it has

2:04done for many years that's right. Yes since the not in 90 I think it is. I think last number is our slope and not percent per annum on average. And so the everyday listener would say well you know that would sound so attractive and also obviously it doesn't pay any income so this is something that weighs against it. It's pure price but I think a lot of our listeners would understand that and I always heart back not so much to gold bulls or gold bears but some extraordinary very powerful wealth managers who have said that you should have five ten more percent of your diverse portfolio in gold to the extraordinary Mike Wilson the one the most powerful in the world Morgan Stanley's wealth manager who said you could have up to 20 which was quite amazing. He said that before the rally which was a very good time to say it. So let's just talk about gold. I mean tell us for the casual observer this year it hit itself patch right through the year but in August we saw a bounce what happened there and has that bounce in the gold price kept going. Yeah it's a good question

3:10James we would suggest that the movements in gold this year have been cyclical we maintain that our gold thesis which we established I think back in 2017 as a group still is the underlying drop so in the structural reasons full gold we still very positive on that is you know unsustainable debt levels low economic growth sticky inflation and more recently and last couple years overlaying all that as a geopolitical risk and I think those reasons I suppose explain I think most of the gold price movements we see or we help explain it at least and so when I think about of the movements this year in 2026 I mean we had an extraordinary 2025 we had you know fed cutting rates we had central bank continuing to buy really that was because trying to diversify away central banks trying to diversify away from US dollar and also I'm diversified by their reserve base and that went parabolic as we saw in sort of January and we then of course had the war with

4:15Iran and then that caused a spark in inflation through the oil price and I think that's you know a lot of it can be explained by real yields and of course with inflation sparking and nominal rates increasing I think we saw there was a headwind full gold price particularly with the new fed chair but in the cutting that you know I've been quite hawkish so if you were explained to someone someone didn't know anything at all about gold yeah and you were pitching your case to them and you would say okay you've met the obvious explanations there that global uncertainty, a central bank buying, the debatement trade as they call it basically at the every central of this perhaps is worries about the US financial policy, the stability of the US financial system which is the heart of the global system and then particularly inflation the one of the factors you mentioned there was rising rates now rising rates isn't good for gold right so one of the

5:18things you mentioned to us that was good for gold and 25 was that rates for dropping now that that's turned and certainly global rates they are not going now it would seem so is that a factor that has cooled it again in recent weeks after the little bounce in August you could actually tell us a little bit more about that bounce what was the bounce and how important was it? I think that's very important and again the emphasis was a point that we think gold structurally is very positive going forward so I think what we're seeing at the moment is a we saw the treasury indicating that they wanted to get yields lower I mean they intervened in the end of the Japanese yen and more recently they've indicated they're going to be doubling or increasing their buyback particularly the longing of the yield curve and that is to reduce yields you've then got the Fed indicating that they're quite hawkish as well so you've got basically competing forces if you like big bonfire basically exactly the barn market and what the Fed wants yeah exactly and

6:19neither of them want to break the economy but I think it's going to be an interesting to see who sort of effectively wins out from there in L you at least we think that interest rates can't go much higher the you know the treasury has indicated that real rates of p to have picked in L view and I think it's the direction of real rates is the real driver of the gold price right that's what really matters yeah yeah and I think we had peaked in terms of real rates because there's a saying we've got the real pinch point the treasury now you know as I said they're intervening to keep along the end of the yield curve down so I think that is a real indication and the reason why we saw the recent bump while we're seeing a little bit of softness now is because of what the Fed's commented that Jackson Hole last week in terms of right potentially going up as wise and maintaining that hawkish sort of stance but it's a real yeah conflicting forces there do you believe that gold is an uncorrelated asset do you believe that gold yeah generally sinks as markets are stronger and generally rises as markets basically if the

7:26market's dropped gold goes up that's its defensive power do you think that's still there or do you think it's really more a worth preservation to now now we definitely think it is uncorrelated asset I mean the numbers we look at definitely suggest that and so we do think that it is a store of value it's also a level of trust and that trust I suppose in the financial economy I think is lost that's why we're seeing central banks continuing to diversify away from the US dollar is that level of trust I mean if I'm a central bank I mean unlike you know sovereign currencies in a gold carries no political allegiance or bias and as far as unlock government bonds you know there's no counterparty risk to gold and unlike bank deposits gold can't be frozen or sanctioned if the help domestic is so from that perspective it's a very attractive asset particularly as levels of trust and globally are declining but if it's if it is down correlated why did it have a fabulous year in 2025 and the markets also had a fabulous year

8:27I don't it's not a problem of you own it but it's a problem for the theory that it's an uncorrelated asset I think again my view is that apart from the AI space there is a lot of instability in the global economy and I think the smarter investors are seeing that and if you like investing in gold but then also that AI is driving the economy so it's effective where it's almost a hedge both whites right yes okay interesting and that folks I think is hopefully useful to you as a sort of a preamble basically to what we're going to talk about now what we're going to get into with Cameron is how people are getting into gold and obviously there's bullion it's a some extent there's jewelry in there but for serious investors basically there's two is in bullion and shares shares might be in the form of a fund like here's where they may be direct we're going to talk about that in a moment back in a second

9:32hello welcome back to the Australian's Money Puzzle podcast I'm James Kirby I'm talking to Cameron Jed of the Smorgan gold resources fund so we were talking about how you had I think it's only about five percent of your two hundred million fund in pure gold right and the rest then is miners all around the world that's how it goes pretty much the moment we do have a a risk jurisdictional risk aversion so we prefer to maintain exposure to Australia and probably two one yeah I noticed that you're about to be half 50 percent Australia huh yeah that's right so Australia and also North America as well so we're not going to go to places like Africa we understand it's very perspective but just from a a risk aversion we're not going to go there and and stop the risk yeah exactly stop the risk okay so if we talked about gold and people can make their own mind of it they wanted to fight gold right gold bullion and we've talked about the basics there and there are other ways in but primarily it's gold or maybe an ETF over gold bullion to straight gold physical gold you mentioned at the very start the reason you do what you do

10:37in gold mining stocks is leverage now explain if you want to general the listener the big difference between buying gold and buying gold miners yeah I mean like I said the gold miners are a leverage play on the gold price so obviously the gold price drives revenue are you then got a largely fixed cost base so any increase in the gold price you'll see it leveraged about two to three times historically through the gold equities so hence we'd prefer to play in the gold equities just do that leverage really right and then run ahead of do they or do they lag they had periods where they lag but in general and we've seen it in previous bull markets you know the gold equities you'll see that two to three times at performance from the gold equities compared to the gold price but do they run up ahead of the gold price or behind it I would say behind it behind it after

11:40it okay so once everyone knows that gold has gone up by 20% of whatever then they say oh well that gold miner over there its costs are X and it's revenue is suddenly X plus 20% that's your leverage and so to some extent I put it to you that your single biggest challenge in your job and your biggest risk for all the investors that are with you and we'll assume the gold let's just assume the gold price that ticks off right generally over the years every year that might not do it every year but if we do it over our trend basis and let's say it will do at least while it's down the past being coming up on 9% maybe it will do better than that but your big risk is operational risk right because unbelievably gold miners are I wonder I'd love to know are they particularly bad among miners for blowing it tell me I'll be careful what I say you don't have to mention names

12:42I would agree that yes so we do prefer to buy the gold miners historically they don't have a great reputation if you're thinking about post the GFC you know when the last gold a bull run we had a lot of the miners grew for growth sake if you like and they overlead which their balance sheets and then the gold price turned they were in trouble and then they blew up effectively what we're seeing now though I would say is that the discipline in the gold space is very strong we're seeing incredible strength in the balance sheet the miners are generating enormous cash flows and then the miners are way attracted to obviously and we're seeing dividends and buybacks are occurring and the miners want to say maintaining also their discipline in terms of M&A and that's obviously another hot topic when is the a space coming and we are seeing it well I think it's they've been very disciplined deploying any to M&A the gold miners as a class of miner is it something to do with how gold is mine that they seem to have more

13:43operational problems and floods and soldiers and compared to say iron ore is it just riskier in that way yeah I would say different is if you're comparing to iron ore yes I think it's a riskier mining operation than on all the bulk commodities what coal it's riskier than it's precious metal rather than the metal and it's riskier in that basis yeah and the only thing they seem to get wrong is hedging and currency again is there something about gold that makes that the more of an issue I would say the moment hedging is not some of the gold miners are seeking it seems you know they're heard of loud and clear from investors that you know we don't want you to hedge we want the gold exposure therefore we'd prefer you not to hedge but obviously I'm sorry Cameron but just and just been down good for a long time but isn't the Australian dollar now rising against the US and gold is priced in the US so wouldn't you think hedging you'd come back to clean I've a very good friend that was rural that would maybe argue that point as well who does advise a lot of companies on hedging strategies but still my tender point that investors what

14:48that exposure to the gold price now obviously if you're a mining company looking for financing and the banks to provide debt want a level of protection from themselves the downside they do why sometimes a level of hedging so that is probably the at the moment the only reason why gold companies want would take on hedging I would say on the whole as a general I'm talking about the Australian industry here I think they're also the North American the hedging is not many companies have active hedge books at the moment okay and you mentioned but we're nearly there folks we will talk names don't worry we're going to the next section we will talk stocks right individual stocks for the something very important that Cameron brought up which was mergers and acquisitions and take over please the king Kong of the sector the gala of the gold sector was always new crest and they somehow managed to sell themselves right smack before the best

15:51gold rally we saw for whatever 30 years I mean do you think that's true first of all I mean Numaat is now the big one right because they bought new crest give give us an idea of what the sector looks like I mean people who don't know it they know BHP and Rio and Fortescue and Arno or give us a head of copter view of the stock picture that you look at every day yeah I mean look you've definitely have I'm a way classified as a senior producers and that's probably anything above a million ounces a year of which you know that's North America predominantly North American because you've got as you mentioned new mod barric ignica gold etc those sort of companies are producing well over a million ounces new mods sort of six million kin rosters at two million ounces a year the only Australian that makes that threshold million ounces a year is a northern star and they have been particularly riddled with both management and operational issues haven't they have where are they now where how do you read them now look a lot is going to depend on how they they've

16:52done a massive growth project their capital is super pit and now I was there just a couple of weeks ago you know it's an amazing project the size of it is enormous the performance of northern stargine Ford will depend enormously on the success of that ramp up so that that would be the interesting one to say but do you have it weighted in your fund as pro rata market cap or lower or or higher than it might naturally now we're benchmark agnostic at the moment I don't have exposure to all the stuff but I think that there will be a time when I'm comfortable with the ramp up of case at the end that though it will generate a lot of cash okay and one other very interesting company you might tell us about is Genesis and the this extraordinary entrepreneur who's sort of putting all that together did you tell us a little about that that story basically yeah I could go on forever here because we've had a very close association with it we have been a quadrallage investor in vault which was originally the red fox so this is VA ULT vault yes thought which Genesis

17:55is merging with the mind yes yes so Genesis was the gold miner it's merging with Ford when this is over it becomes what how big is it in terms of the picking order it will become a probably I'm going to say 700,000 ounces a year producer from an area about 300 kawis north of Calguli Leonora and Lavinton in that region they've got an enormous resource in that region producing 700,000 ounces but with numerous growth options that they are sorting through with the mindless bias and there is a single dynamo manager in the middle of all that could you tell us about who that is Riley Finlayson yes he was ex-Sarrison which was the company that merged with northern star a number of years ago now but it looks to be doing the same again which is building from a a low base another you know very significant mid-tier gold miner in the Leonora leviton region and really it's underpinned by what vault brings to the merger which is the king of the hills mill they've recently expanded it to our 8 million tons per annum but I expected it probably go

18:58closer to 10 million tons per annum when it's actually operating and really that will be the hub if you like and then all the assets around it I'll feed into that hub all that mill and feed it and I think you're going to see an amazing growth there and so many options that Riley now has in front of him or sorry I shouldn't say now he has in front of him the deal is yet completed but I expect it will we'll soon have in front of him yeah exactly soon have open and this Riley Finlayson to what extent your whole proposition is the two ad value I don't buy an ETF I just don't buy an ETF on gold miners because your proposition is you will do better than passive investors so you're going to hand pick the best companies how important is someone like Riley Finlayson to you where you see a manager who is literally extraordinarily ambitious but managing to pull off amazing deals buying a company that's as big as his own company etc how important are they to you in your selection of your main picks management critical absolutely critical

20:03for any gold one and Riley does definitely tick that box here is a very good record for that and so yes management for us is critical but it also depends on the stage of life for what manager you need for the gold project so if I'm an explorer I prefer that we are a geologist to be the CEO of ways you know Genesis is now our office here producer and Riley being a morning engineer I probably prefer somebody who really understands the operations to be running the company so management it's absolutely critical and then at the very top basis at the very top we've got new months and barrack or whatever you're really talking about the global technocratic executives that could be running and I'm guessing but I presume it's it gets to that level I wouldn't disagree with that yeah okay very interesting with what we're going to do is we're going to take a look at a few of Cameron's favorites basically who we like so he doesn't like and we'll be back in a moment

21:04hello welcome back to the australians money positive podcast I'm James Kirby and I'm talking to Cameron Judd who is the fund manager at the smorgan gold resources fund okay let's have some for now who to the extent you could tell me if you prophesy as you top 10 holdings no we don't we do talk about some of our positions and I'm happy to do so yes probably our five or more five before ones yes okay and to the extent you could tell us who you don't like that'll be good too but you have the floor Cameron oh wow look what are the ones that we like in North America is equinox I think that company there is recently merged with all of morning another North American elisted gold producer you know the company together will produce about one for one million ounces of gold a year against similar to what I spoke about earlier with Faginistus I think it has a number of levers it can pull to realize a greater value there for the shareholders and one of that is its growth profile it has I think in my view a very clear pathway to grow from one for one

22:07million ounces a year to one point nine million ounces a year I want to look at it on its valuation you know it's trading on a lesser one times price to NPV valuation where's the senior go and so as I said it's it reaches out threshold of greater than million ounces so I think it's a senior gold producer when I look at what the others are trading on sort of close to one point one times price to NPV so I think there's a re-rate opportunity for equinox is that something you is that more important than PE ratio for you yes it is yes I mean I do also look at earnings metrics but I prefer an EV to EV but duh why is that just to explain to listeners what you're looking at there what you're really trying to excavate yeah I think that EV to EV but duh metric is more a better reflection on cash flow and it's before the accountants I'm a simple engineer background and old engineer from a long time ago I understand the cash flow once the accountants get hold of it and get them stand at the you know earnings line it gets a bit messy I suppose in my view yes so many additions or subtractions I want about on the ASX yeah look I mean we spoke

23:11about Genesis and I you know I get I think that that are really very strong outlook particularly when that merger is completed and I expect to will as I said later this year the value is as I said sorting through the numerous options that he has and the synergies that he'll be able to achieve and he'll update the market first quarter of next year I understand on the outlook for the new company wishing everything goes ahead and I think that will surprise a lot of it in the market in terms of the upside to that and what he can achieve there another company I particularly like is Remelius Garamidius yes yeah the car pricing I believe it's undervalued the company is looking to grow its production profile to 500 thousand ounces it's stated but I think it'll grow close at a 600 thousand ounces a year by 2030 it's got a very strong balance sheet so it's fully fine and I think that again the company will it's under promising and I think it'll over achieve right right tell us about to take over target so it was very hard to pick them but I suppose

24:12Newcrest was a sitting duck wasn't that looking back do you regret that it's gone do you regret that it was taken out so smartly by by Numod oh look I've done regret it yeah the space is always evolving yeah sure and I know it's healthy but did they got a cheat I do think I probably got a cheat yes I also think though that Numod was very opportunistic and you know there was a new CEO coming in and I think it was just an opportunistic acquisition for them right and just to cover off on the other very big mining stocks we mentioned or the star we mentioned Genesis we mentioned Remelius what are the others evolution where do you stand out that evolution look yes I you know I evolution I respect they are very good operators and they have copper exposure as well but I probably I think they're fully valued at the moment in my view at least okay you golden copper often found together aren't they do you do what do you do about thank you try and find pure gold please or how do you do it no look we don't mine mean copper are absolutely we very favorable as a house on copper as well and it acts as a byproduct to reduce those costs so

25:15you know I think it's always a positive as well it's not as common as you'd expect the gold and copper I mean obviously we prefer the gold companies which I sort of rank them as if they've got 70% of their revenue coming from gold then I classify them as a gold company right you have the AI whether you want it or not you have the AI correct click on copper don't you which evolution absolutely benefits from well look at their cash cost yeah never really never really thought about that we're running out of time it's really good to talk to you Cameron thank you very much for coming out of the show no problem James hopefully that was helpful and I thank you to follow up phone calls from some of the monitors you might get this sort of follow up for cause you want I imagine very good thank you very much that was Cameron Judd folks from the Smolgen partners gold resources fund specialist fund that invests in gold but particularly in gold miners okay keep the emails running I haven't come to do any questions but I will very soon then I'm just collecting them

26:18for the moment and she'll raising them for future guests the money positive at the australian backcom.au is the address today's show was produced by Leah Samaglut talk you soon