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Dave Forest

Dave Forest

Dave is Managing Geologist of the Pierce Points Daily E-Letter.

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This $16 Billion Fund For Gold Mining Could Shift Market Dynamics

One of the world's largest sources of funding for gold miners was announced this weekend. But you have to be in the right part of the globe to grab a piece of the investment cash.

China announced that it is leading a massive fund-raising for gold projects. With the country's Shanghai Gold Exchange (SGE) expected to help create a pool of capital totaling 100 billion yuan -- or about $16.1 billion dollars.

The news came at a major trade and investment forum in China's northwest Xi'an City. With officials from China's Industrial Fund Management Company here saying that the billion-dollar fund will investment in gold miners operating in one specific geographic area.

The Silk Road.

This obscure-sounding area was outlined by Chinese officials last summer as a major zone of economic focus for the country. As the image below shows, China's "Silk Road Economic Belt" (along with the southern "Maritime Silk Road") stretches from China itself in the east, all the way to Italy in the west. Related: China To Create An Oil Supermajor Twice The Size Of Exxon?

SilkRoad

Some 60 countries from the Silk Road will reportedly invest in the new gold fund. With the stated goal being to fund gold miners in order to obtain bullion for central governments here. Related: Saudi Arabia Planning For Transition To Renewables

The fund is also part of a plan to "increase the influence of [Chinese currency] RMB in gold pricing", according to Chinese officials.

The key question is: which gold projects could receive funding from this new vehicle? Officials for the fund specifically mentioned countries such as Afghanistan and Kazakhstan as potential targets. But there are certainly more countries in the belt that could be sources of bullion production.

Beyond the Stans, important mining nations on the Silk Road include Iran and Turkey. And even spots like Serbia further west. Related: China Gaining Influence In This Key Emerging Coal Market

Indonesia and India are also well-positioned on the maritime route. And even a further afield place like Kenya might get attention for gold.

Whatever the case, if the fund does get raised, this is going to be a leading source of mine financing. Watch for more announcements on the completion of the $16 billion investment vehicle.

Here's to the yellow brick road,

Dave Forest

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