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How to Spot the Next Big Investing Wave, According to Frank Holmes

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The following content is sponsored by U.S. Global Investors

How to Spot the Next Big Investing Wave, According to Frank Holmes

How to Spot the Next Big Investing Wave, According to Frank Holmes

The world is constantly being shaped by powerful waves that ripple throughout the global economy.

When analyzed effectively, these macro trends can serve as a key investment tool.

Today’s infographic comes from U.S. Global Investors, and it highlights how its team uses macro trends to identify investment opportunities.

Preparing for the Next Wave

Frank Holmes, CEO and Chief Investment Officer of U.S. Global Investors, is responsible for developing and overseeing investment strategies. One fund under his team’s management is the Holmes Macro Trends Fund (MEGAX), which follows a combination of two approaches.

  1. Analyze macro trends in an effort to find the fastest-growing sectors.
    Macro trends are defined as long-lasting, pervasive shifts that affect a large population. They generally fall into one of the following categories:

    • Demographics
    • Economics
    • Environment
    • Government
    • Society
    • Technology

    A key benefit of macro trends is that they are unbiased, and cut through the endless headlines created by today’s 24/7 news cycle. They also help investors gauge market expectations, which in turn help drive long-term price trends.

    Here are a couple examples of current macro trends, and the investment opportunities or threats they present:

    • Aging populations
      Africa has the world’s youngest population and is least likely to be affected, while China is particularly vulnerable given the one-child policy.
    • Rising interest rates in North America
      Financial companies may be able to improve their interest rate spread, while the real estate and automotive sectors may be negatively impacted by higher financing costs.

    Once Holmes’ team has identified the regions and sectors with the best opportunities, it moves onto the next step.

  2. Analyze companies within those sectors in an effort to find the ones growing the fastest, at a reasonable price.
    Traditionally, investors subscribe to either the growth strategy or the value strategy. Holmes’ team uses the Growth at a Reasonable Price (GARP) strategy, which combines elements of both.

    • Growth – Buying stocks of companies that have been growing fast and may increase in price over time.
    • Value – Buying stocks that appear to be undervalued by the marketplace.
    • GARP – Buying stocks with a track record of consistent earnings growth and reasonable valuations.

    Some other key metrics are also used to evaluate companies, including quarter over quarter sales, growth in earnings, and return on equity.

Professional Management

Macro trends are the waves that shape the future – but to ride them, investors need to pick the best companies in these sectors. The MEGAX fund, under the leadership of Holmes, follows this strategy.

Why invest in MEGAX?

  • Experience: Fund managers have a total of 60+ years’ experience
  • Strategy: Pragmatic investing that cuts through the 24-hour news cycle
  • Composition: Diversified portfolio to decrease risk

Investors don’t need to discover the next big wave themselves. Instead, they can invest in MEGAX to take advantage of U.S. Global Investors’ experienced management.

Please consider carefully a fund’s investment objectives, risks, charges and expenses. For this and other important information, obtain a fund prospectus by visiting www.usfunds.com or by calling 1-800-US-FUNDS (1-800-873-8637). Read it carefully before investing. Foreside Fund Services, LLC, Distributor. U.S. Global Investors is the investment adviser.

Stock markets can be volatile and share prices can fluctuate in response to sector-related and other risks as described in the fund prospectus.

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Ethical Supply: The Search for Cobalt Beyond the Congo

With the current supply chain of cobalt under scrutiny, companies and governments are striving to find new sources of cobalt beyond the Congo.

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Ethical Supply: The Search for Cobalt Beyond the Congo

Each new generation finds new uses for materials, and cobalt is no exception.

Historically, potters and painters used cobalt as dye to color their work. Today, a new cobalt supply chain is emerging to build the next generation of clean energy.

However, there is lack of transparency surrounding the current supply chain for cobalt, as the metal is subject to a number of ethical issues from its main country of production—the Democratic Republic of Congo (DRC).

Today’s infographic comes to us from Fuse Cobalt and uncovers the potential for new sources of cobalt beyond the Congo.

Cobalt’s Growing Demand

Cobalt’s specialized properties make it crucial for rechargeable batteries, metal alloys, and EVs:

  • Thermal stability
  • High energy storage
  • Corrosion resistance
  • Aesthetic appeal

As the markets for EVs and rechargeable batteries grow, the demand for cobalt is expected to surge to 220,000 metric tons by 2025, a 63% increase since 2017.

But can industry meet its demand with a supply of ethically mined cobalt?

A Precarious Supply Chain

In 2019, the DRC produced 70% of global mined cobalt—a majority of which went to China, the leading importer of mined cobalt and an exporter of refined cobalt.

Moreover, 8 of the 14 largest cobalt mines in the DRC are owned by Chinese companies, resulting in a highly controlled supply chain.

Why the Democratic Republic of Congo?

When it comes to cobalt reserves and concentrations, DRC looms over the rest of the world as a clear leader.

CountryCobalt reserves as of 2019 (tons)
Congo (Kinshasa)3,600,000
Australia 1,200,000
Cuba500,000
Philippines260,000
Russia250,000
Canada230,000
Madagascar120,000
China80,000
Papua New Guinea56,000
United States55,000
South Africa50,000
Morocco18,000
Rest of the World500,000
World total (rounded)7,000,000

The African Copper Belt hosts the majority of the DRC’s cobalt deposits, where it is primarily mined as a by-product of copper and nickel mining.

Low labor costs, loose regulations, and poor governance in the DRC allow for the flourishing of artisanal mining and cheap sources of cobalt.

However, cobalt from the DRC is tainted by ethical and humanitarian issues, including:

  • Child labor
  • Corruption
  • Crime
  • Poverty
  • Hazardous artisanal mining

With the current supply chain of cobalt facing scrutiny and criticism, a transformation in the cobalt universe is well underway.

Cobalt’s Changing Landscape

As consumers become aware of the dirty costs of cobalt mining in the DRC, battery and EV manufacturing companies are looking for ethical sources.

Tesla, BMW, Ford, and Volkswagen are part of more than 380 companies that have committed to responsible sourcing through the Responsible Minerals Initiative. Responsible sourcing entails increasing supply chain transparency and searching for sources of cobalt outside the DRC.

Here’s how some companies are leading the way:

  • Ford, Huayou Cobalt, IBM, LG Chem, and RCS Global are using blockchain technology to improve transparency and trace the sources of cobalt.
  • BMW signed a $110 million deal for cobalt from Morocco’s Bou Azzar Mine, in an effort to avoid cobalt sourced from the DRC.
  • Tesla agreed to buy 6,000 tonnes of cobalt annually from Glencore, a multinational company financing North America’s first cobalt refinery.

The U.S. recently added cobalt to its list of critical minerals—minerals for which it seeks independence from imports. The effort aims to reduce its net import reliance of 78% for cobalt, encouraging more localized and reliable production.

As a result of these shifts, the entire supply chain is beginning to reconsider cobalt sources in better-managed jurisdictions.

Cobalt Beyond the Congo: Why Not North America?

North America has comparable sources of cobalt to what is found in the Congo. As of 2019, Canada had 230,000 tons in cobalt reserves, whereas the U.S. had 55,000 tons.

Canadian Opportunity

Ontario hosts some high-grade cobalt deposits such as the Cobalt Silver Queen, Nova Scotia, Drummond, Nipissing, and Cobalt Lode mines.

In fact, Bill Gates, Jeff Bezos, and other billionaires from the Breakthrough Energy Fund are already fueling the exploration and development of cobalt deposits in North America.

Unsung North American Potential

The United States is home to 60 identified deposits of cobalt. These sources along with Canada’s deposits, should provide explorers and miners with a massive opportunity to develop cobalt mining in North America.

As the EV industry booms with gigafactories in construction, will North American carmakers and other battery makers be able to pivot to ethical, local raw materials?

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On the Edge of Discovery: Canada’s Next Gold District

Canada is home to prolific mining regions, but there is still more to find. The Trans-Hudson Corridor could be Canada’s next major gold district.

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Trans-Hudson Corridor

On the Edge of Discovery: Canada’s Next Gold District

Canada is home to some of the greatest gold districts in mining history. These regions occur mostly across Ontario, Québec, and British Columbia, where past mineral exploration has uncovered their geological potential.

But Canada is vast, and there are still more regions to explore—in particular, the Trans-Hudson Corridor. It’s here that SKRR Exploration and Taiga Gold are leading the way into a new mineral frontier, with the hope of uncovering Canada’s next gold district.

Canada’s Major Gold Districts

The Abitibi Greenstone Gold Belt, the Red Lake Gold District, and the Golden Triangle are key sources of gold in Canada.

  1. Ontario and Québec’s Abitibi Greenstone Gold Belt:

    With over 100 mines, this gold belt stretches across the provinces of Ontario and Québec from Wawa to Val-d’Or. The belt has produced a massive 180M ounces of gold over its history and remains today a source of gold and employment in Northern Ontario.

  2. Ontario’s Red Lake Gold District:

    The Red Lake Gold District experienced its first gold rush following initial discoveries in 1897 and 1925. With over 30M ounces of gold produced since then, the Red Lake mining district is one of the largest and highest-grade gold camps in North America.

  3. British Columbia’s Golden Triangle:

    Having hosted the Stikine Gold Rush and the Atlin Gold Rush, the Golden Triangle is a popular destination for exploration companies. Investment in the region has produced 5.26M ounces of gold and impressive discoveries such as the Bruce Jack mine and the Kerr-Sulphurets-Mitchell (“KSM”) project.

Although these regions have garnered attention from large mining companies, the Trans-Hudson Corridor is open for a new era of discovery, and very few companies have taken advantage of it.

The Trans-Hudson Corridor: Canada’s Next Gold District?

The Trans-Hudson Corridor lacks an extensive exploration history, but it shows potential as a prime area for discovery.

Geological Potential

The Trans-Hudson Corridor stretches from the Dakotas of the United States to James Bay in Canada. One of the few remaining exposed portions of the Trans-Hudson, the Black Hills region of South Dakota, hosts the famous Homestake Mine, which produced 43.7 million ounces of gold and 9.9M ounces of silver before closing in 2001.

Despite the geological potential of this corridor, there have only been a few operating gold mines in the northern portion of the Trans-Hudson. One study indicates there may be more gold mineralization near the Snow Lake mine.

Saskatchewan: Major Gold Mines and a Lack of Exploration

Saskatchewan has geological potential—but compared to other regions, explorers are barely scratching the surface.

For all of Canada in 2018, mining and exploration investment amounted to C$2.2 billion. Saskatchewan received some of the lowest amounts with only C$165 million expended. Only 2% of the $165 million went towards exploration for gold, while the rest for uranium and potash.

Canada: Safe and Stable Mining Jurisdiction

The Trans-Hudson Corridor offers a safe, stable, and accessible mining region in today’s volatile world. In particular, Saskatchewan provides a competitive edge for mineral exploration:

  • Affordable access to North American capital markets
  • Mineral exploration incentive programs
  • Low-cost, high-quality road and power infrastructure
  • A well educated and professional workforce

Canada has the geological potential for big gold discoveries and the next era of discovery could be waiting in the Trans-Hudson Corridor.

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