Far East Capital Newsletter
The inflation narrative is changing
16 Oct 2022

In This Issue

The inflation narrative is changing

The challenge right now is to contain inflation so that it doesn't get out of hand. In the prior week there had been optimism that containment was indeed happening, with the market jumping in response, but that glimmer of hope lost momentum last week.

If the targets are too hard to achieve, the obvious solution when seeking gratification is to amend them. Make them more tangible. That is what central banks are starting to consider. It looks like inflation will be above 2% p.a. for the foreseeable future, so the bankers are telling us that there is nothing magical about that figure. They are suggesting that the range of 2-4% is more acceptable and manageable as the they try to deflect criticism.

The most compelling company that I saw at the 121 Mining Conference last week was Emerald Resources (EMR), the 100,000 oz p.a. gold producer in the unlikely SE Asian country of Cambodia. It has successfully commissioned the open pit Okvau Gold Mine with a life-of-mine, all in sustainable cost of US$754/oz.

Emerald is an institutional quality gold producer that you can buy now and just forget about. It is that good. Next time you look at it, a year or two in the future, it may be selling at market capitalisation of more than A$2bn.

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