Wednesday, May 15, 2013

Mining Industry In A Downward Cycle - Hoffman of Bloomberg - Kitco News




Kitco News' Daniela Cambone talks to Bloomberg's Head of Global Mining Analysis Ken Hoffman on the future of the mining industry. Despite high lending rates and an inability to raise capital, Hoffman believes private equity firms can be the "saviors" of this sector. The junior miners are the ones really struggling now as more than 40% of them have less than 3 months of cash on hand. Unfortunately, they aren't the only ones; Hoffman says that everyone in the industry is feeling the pinch as investors opt to put their money into ETFs. According to Hoffman, more than $300 billion in investment capital flowed into gold ETFs alone. However, private equity firms can still benefit by hedging and ultimately obtaining guaranteed cash flows. Even if the mining sector looks bleak, there could be some light at the end of the tunnel.
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