Is China’s Silk Road Fund About To Make Its First Big Move Into Gold? by Dave Forest, Pierce Points
China’s new Silk Road trade route is quietly becoming one of the biggest stories globally in natural resources. With reports the past week showing that this emerging trade corridor may have a new target commodity for big Chinese investors.
Concentration in hedge fund portfolios has been rising throughout the year and approached a record high during the third quarter. In fact, the only time concentration was higher was during the fourth quarter of 2018. Hedge Funds Are Highly Convicted But With Minimal Crowding According to Goldman Sachs' Hedge Fund Trend Monitor for the third Read More
Bloomberg broke the story late last week that China’s $40 billion Silk Road Fund is looking at buying its first gold mine. With the big buyer reportedly in talks over the Vasilkovskoye operation in Kazakhstan.
Vasilkovskoye currently belongs to Glencore — a firm that is aggressively selling assets in order to pay down debt. And it appears the sale of Vasilkovskoye may go a long way toward that goal, with the Silk Road Fund apparently considering a price tag around $2 billion.
Reports suggested that the Silk Road Fund won’t bear this whole burden. With the fund instead looking to partner with gold producer China National Gold Group in making the acquisition.
All of which would be a major development for a number of reasons. Not least of which because it would be one of the Silk Road Fund’s biggest acquisitions anywhere in the mining space since its creation in 2014.
But the fact that the big buy is coming in gold is especially significant. Showing that Chinese appetite for precious metals assets in reaching significant levels — a revelation supported by the involvement of another major Chinese mining firm in the potential bid.
In fact, sources said that two other Chinese miners — Shandong Gold Mining and Zijin Mining Group — might actually make an opposing bid against the Silk Road Fund for Vasilkovskoye. Showing that interest in quality gold assets is running high throughout the Chinese resource sector.
That’s great news for project developers globally — and especially those falling within the Silk Road corridor. Watch for more deals being investigated in spots like the ‘Stans, Mongolia, and maybe even as far as Iran.
Here’s to the road made by people walking,