Moving From the Field to Finance: A Look at VanEck’s Philosophy on Gold Investing
GILLIAN KEMMERER: Welcome. I’m Gillian Kemmerer. As VanEck celebrates 50 years of gold investing, today we sit down with the portfolio manager behind the Strategy. Joe Foster has been the primary Strategist for gold and precious metals since 1998 and is representative of VanEck’s commitment to bringing industry experts from the field to the investment team. Joe, thanks for joining us and congratulations on 50 years.
JOE FOSTER: Thank you, Gillian.
KEMMERER: Let’s start off with your life before VanEck. Tell us a little bit about your experience in the field.
FOSTER: Before VanEck I was managing the geology department at one of the gold mines in northern Nevada. There I was responsible for exploration, bringing new reserves into the mine plan, and extending the life of the mine, all sorts of technical issues around mining, like slope stability and dewatering, metallurgical issues, grade control. So I’ve got a pretty good technical background in mining and exploration that I use today as an analyst when I’m trading, buying, selling, and analyzing these gold companies.
KEMMERER: This is quite a career transition. What exactly brought you to VanEck?
FOSTER: I came to VanEck in 1996. By that time I had been to business school, I got an MBA. My idea was to combine my experience as a geologist with the financial side of the business. Coincidentally VanEck was looking for an analyst; my predecessor was getting ready to retire, so they wanted somebody to replace him. I found out that VanEck had always had somebody from the industry on the gold fund. They also have a history of hands on, sort of boots-on-the-ground, research where they like to visit the mines, go out and meet the people on the ground, go through the core, the cross sections, and go through the operations. That really resonated with me.
KEMMERER: How difficult did you find the transition from mining to finance?
FOSTER: Fortunately I had a couple of fantastic mentors when I came to VanEck. First was Bill Trebilcock, my predecessor. Bill was a geologist; he had spent many years analyzing gold companies. So I trained under Bill. In fact, Bill was using models; I guess a crude form of the modeling that we do today. But I was able to take Bill’s models and adapt them to a spreadsheet. Those were really the seeds of the modeling that we do for the companies today in our research process. My second mentor was John van Eck, the founder of the firm. John started the gold fund in 1968. John was an “Austrian” economist. When I was in business school, you had either monetarists or Keynesians. Business school didn’t spend much time on Austrian theory. I got that from John and it really resonated with me. He was able to teach me about the role of gold in the financial system, the debt cycles, how monetary policy impacts the economy. So through those sorts of mentorships, it’s reflected today in the way we research the companies and our thoughts on the economy and our forecasts in the gold market.
KEMMERER: You referenced that VanEck has a history and continued practice of bringing experts from the field to the investment team. Where do you find that your skills as a geologist become the most useful as an investor?
FOSTER: I guess it would be in two areas. One, when we’re going to active operations and where you can talk with the engineers and the metallurgists and the geologists on site. I can talk their language, I’ve been in operations, I know what to look for, positive and negative signs. I know what questions to ask. And I think they’re much more comfortable talking to somebody that more or less speaks their language. So it’s really invaluable to our research process to have that window. The second area where I really use my skills as a geologist is with the early stage companies, not explorers, I would say junior developers. They all have properties. They’re all generating nice drill results. They all think they have the next gold mine. Very few of them actually do. So it’s sorting through who has the really strong properties that are going to make it to production and generate a good return for shareholders from the ones that just aren’t quite strong enough to get there.
KEMMERER: Joe, thank you so much for taking the time for sharing all of your experience with VanEck and even previously, and congratulations again on the golden anniversary.
FOSTER: My pleasure.
KEMMERER: For more insights on gold and other strategies, visit vaneck.com/ucits/subscribe. From our studios in New York, I’m Gillian Kemmerer.