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Otavio (Tavi) Costa, founder and CEO of Azuria Capital, asserts that mining can be the cheapest way to invest in artificial intelligence (AI ) today, as he sees the sector getting more attention from sovereign institutions, governments and investors.
“Institutions turn from ‘we don’t care about mining’ to ‘oh wow this is a critical industry that we need to make sure we take care of,’” Costa told MINING.COM anchor Devan Murugan on the latest episode of Top of Mine.
“I believe that if you just take one measurement of the mining industry relative to what the global equity markets used to be, a much more relevant size of an industry relative to the overall market and today it’s a margin of error that I believe it’s going to change quite drastically and why I think that this is a better way to implement the idea of investing in AI than actually technology companies,” Costa said.
For Costa, now is also the time to invest in junior companies.
“As investors, we want to be paying attention in my view to two things: the mid tiers that are going to be making those strategic reserves and become the next majors and the high quality assets that are going to be in high demand by these guys that will likely become mines in the near future,” he said. “The same way it happened with the technology space, it’s happening in the mining industry in terms of the passive investments coming into those areas.”
Gold hike and supply
Costa said that today we have the same levels of debt we did during World War II, the only difference being that at that time, 50% of the treasury market was backed by gold. Today it is only 3%. “What do you expect gold to be doing?” he said.
“We’re seeing global money supply continuing to rise and gold has been recently diverging from that line. I believe that gap is just in the process of closing,” he said. “The real driver of what’s been happening is the dilution of money and also on top of it is the demand and the supply aspect when it comes to the production of the mining industry the depletion of reserves, the lack of discoveries, all that is is sort of exacerbating this trend on top of it all.”
In relation to China buying more gold and its debt, Costa argues that both the US and China have issues coming up that can be fixed by buying gold.
“This is why I think it’s really a global monetary race towards gold that we’re seeing and that is likely to end with gold prices much higher.”
Spot gold rose 1.5% to $4,673.20 per ounce by 15:35 GMT (11:35 a.m. EDT), Monday, its highest level since May 14.
Watch the full interview:
