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So you remain bullish on the gold space?
Dr. Kaplan: The strongly held bullishness on gold that I have had since I created Electrum more than a decade ago, and my thesis on Donlin Gold as the ideal way to play the next phase of the bull market, have not changed. If anything, these convictions have been further reinforced by my witnessing anew just how limited are the number of quality assets in the precious metals space – not to mention the tumultuous markets and unreliable jurisdictions that have caused many projects to be shelved or cancelled outright.
Experienced observers will note that sentiment is like the seasons, and many who are presently espousing a hunker-down mentality in the gold industry will be clamoring, when the next leg in the bull market unfolds, to seek out projects with leverage and growth. In an era de ned by asset scarcity, NOVAGOLD provides one of the few institutional-quality ways to gain exposure to both.
Over the last several years, you have sounded the alarm over resource nationalism. Is your argument for focusing on North America opportunistic or borne out of experience?
Dr. Kaplan: I have articulated the case for jurisdictional safety in mining despite having as intrepid a frame of reference as any American entrepreneur in the space – and one for whom the developing world
was a bonanza. Until a few years ago, not counting Latin America, my family’s string of properties ran from Mauritania and more than half a dozen African countries through to Pakistan, where we were the largest holder of mineral rights. So I’m not speaking as a neophyte or Pollyanna when I say that I’m pretty convinced I know whereof I speak when it comes to “funky” jurisdictions.
So while at rst blush my being the town crier about resource nationalism and the like may appear self-interested because of our stake in NOVAGOLD, it’s actually not the case. It’s a function of some unique experiences as a professional investor, most of which were actually quite rewarding. My family invested successfully in “sturdy locales” such as the Democratic Republic of the Congo, Bolivia, Zimbabwe, and – brie y – Venezuela, and did really well. The emerging markets were good to us.
What’s changed then?
Dr. Kaplan: The world has changed. Like all great cycles, we’re seeing the pendulum swing back to safety. The frontier mentality that led miners to look for new and more exotic places for opportunity is fading away. In the end, mining is about location. You can have the greatest mine in the world, but if you’re in a part of the world where the rule of law is a novelty, the odds that you will be met with social or political problems are enormous. Perhaps there are exceptions. But I reckon that, in a positive global environment, resource nationalism will continue to chip away at the miners. Miners, after all, aren’t simply manufacturers that can just pick up and leave for a lower-wage jurisdiction or more favorable political regime. Location is truth. And the truth isn’t always beautiful. If the world does ever go into a recession again, I suspect most countries will nationalize their resources.
That’s the trend we’re seeing all over the developing world. So my clarion call is not so much a function of talking my own book as much as understanding that the story is over and that the last chapter will not be a happy ending. So why wait for the inevitable? As Woody Allen once said, “I’m not afraid of death; I just don’t want to be there when it happens.”
What’s the future of gold as a form of currency?
Dr. Kaplan: The collapse in oil is a reminder to investors that, unlike oil, gold isn’t simply a commodity. It is, rst and foremost, a kind of money. From the Americas to the deepest recesses of Europe, Africa, and Asia, humanity has regarded gold as a form of currency since the beginning of recorded history. That’s not going to change. In fact, a fund manager in Singapore, who is Indian, was asked how people think about gold in India. His response was telling: “Water, food, land, and gold.” Gold is a better global brand than Coca-Cola. If anything, the understanding and appreciation for gold is only going to improve since it’s the only currency that cannot be printed at a time when major reserve currencies are being cheerfully debased – among them the U.S. dollar, the euro, the pound sterling, the yen, and even the Swiss franc. After a 40-year secular trend
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