Gold: A Slow Burner

Bullion Vault

As the Western world gets back on track, commodity prices will continue higher…

A GEOLOGIST with engineering and business training – and more than 20 years of hands-on experience in the resource industry – Lawrence Roulston has been publisher of the Resource Opportunities letter since 1998.

Here he speaks to the Gold Report about what factors impact gold and other metal markets, and why he believes Gold Mining stocks offer good exposure to investors.

The Gold Report: Lawrence, you have just returned from trips to Dubai, Hong Kong and Europe. What does the rest of the world think of the health of the US and European economies?

Lawrence Roulston: It is striking how different the outlooks are in different parts of the world. In North America, most people are totally focused on the US economy, which is not looking that promising in the near term. Therefore, investors are quite gloomy.

Europe is also not very upbeat. But, in Europe, they are more pragmatic and they tend to look a little further into the future. As a result, many European investors see this down period as a buying opportunity. And parts of Asia were hit hard by the slowdown, but there is still a lot of growth in China and India. China reacted quickly with an effective stimulus plan that is focused on building infrastructure. Growth there is forecast at 8% for this year. With enhancements to rail, roads, ports and the like, China will become an even greater economic force.

TGR: What is the Asian perspective on the importance of emerging markets to global economic turnaround?

Lawrence Roulston: There is a myth that Asian growth depends mainly on exports to the West. Much of the economic activity in Asia is related to trade within the region. After the credit crisis, there was a severe shortage of export financing, which meant that exports plummeted. Now that financing is available again, activity is recovering throughout the region. Asians are far less concerned about the global situation than they are with what is happening in the region. With China, which is the third-biggest economy in the world, growing at 8%, it doesn’t really matter what happens in other regions. Once upon a time, Asian growth depended on exports to the West. Now, the West will benefit from growth in Asia.

TGR: What do investors in other regions think about precious metals and the US Dollar?

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