Gold vs. Cryptocurrencies take centre stage at San Francisco Summit

By Peter Kennedy

Gold is something that is great to wear. But it is going to get crushed by Bitcoin. That view, expressed during a panel discussion on Monday, triggered some heated debate at the recent Cambridge House Silver & Gold Summit in San Francisco, California.

Michael Gokturk, the Founder and CEO of payment technology firm Payfirma Corp., said Bitcoin investors can look forward to a “one way trade upwards,” potentially for another couple of years.

But cryptocurrencies and blockchain stocks may soon face competition from renewed investor interest in a recovering gold price, which has been locked in a five-year bear market. “I think the stage is set for an industry bull market in gold and gold equities,” said Rick Rule, Chief Investment Officer, Sprott Resource Holdings.

The fact that the gold versus cryptocurrencies argument should emerge as a topic for debate at this year’s Summit should come as no surprise to anyone. That’s because the hot money is currently flowing into marijuana, cryptocurrencies and blockchain technologies.

Investors such as Vancouver financier Frank Giustra have gained exposure to huge returns in this sector, in Giustra’s case by backing Blockchain technology company Hive Blockchain Technologies Ltd. [HIVE-TSXV].

As if to reinforce the point, some of the summit’s 1,500 attendees were invited to sign up for a crypto currency exchange platform known as the Einstein Exchange. Still, during the panel discussion, Rick Rule reminded the audience that the resource sector is traditionally a cyclical business, and what goes down will eventually rise up or come down.

One veteran mining official said he is pleased that gold is holding its own in spite of the competition from digital currencies. Global Investors Inc. CEO Frank Holmes said gold is up 11.5% this year, and has outperformed the market year to date.

“There is nothing wrong with the price of gold if you are mining in Canada,” said Frank Callaghan, a large shareholder of Blind Creek Resources Ltd. [BCK-TSXV], which is gearing up to spin out a British Columbia project known as the Engineer Mine. Callaghan was referring to the fact that gold is trading at over $1,600 an ounce in Canadian dollars.

While the number of exhibitors at this year’s conference is down substantially from the cyclical peaks in 2011, the more intimate feel gave retail investors a chance to look at what some of the participating companies have to offer.

Some were looking for companies which have experienced a retraction in their share price, even though they have been able to add value through acquisitions, exploration successes or a change in strategy.

Companies that fit into that category include McEwen Mining Inc. [MUX-TSX], Orezone Gold Corp. [ORE-TSXV], and GoldMining Inc. [GOLD-TSXV]. McEwen Mining CEO Robert McEwen said he hopes that with assets in Argentina, Mexico, the United States and Canada, the company will soon qualify for inclusion on the S&P 500 Index by creating a profitable gold and silver producer. The portfolio includes the Gold Bar Project in Nevada and Black Fox mine in Timmins, Ontario.

As it waits for the gold price to improve, Orezone Gold has been working to simplify the mining plan at its wholly-owned Bombore Project in Burkina Faso, West Africa. Speaking to Resource World Magazine, Orezone CEO Patrick Downey said the company hopes to be in production within two years.

Orezone holds a 90% interest in the Bombore, a fully permitted, undeveloped oxide gold deposit, located 85 km east of Burkina Faso’s capital city. The project benefits from its proximity to an international highway. Bombore, Downey said, will be one of the lowest cost producers in the market.

Meanwhile, after a series of acquisitions in the past five years, GoldMining has emerged with a portfolio of assets that include the Titribi and La Mina projects in Colombia, Whistler in Alaska, and a suite of assets in Brazil, anchored by the development-stage Sao Jorge Project.

A recent investment report by Roth Capital Partners said the portfolio offers investors strong leverage to the price of gold.