Mark Mobius bullish on gold, oil and Southeast Asia – by John Shmuel (National Post – July 19, 2013)

The National Post is Canada’s second largest national paper.

The Financial Post sat down with emerging markets guru Mark Mobius of Franklin Templeton Investments on Friday to talk about his outlook for global stock markets and commodities. Mr. Mobius is known as one of the pioneers of emerging market investing, and despite the bloodbath in emerging market stocks this year, he still sees plenty of investment opportunities. He also sees potential in gold, which has suffered from its own epic price crash in 2013. Below is an edited transcript from our interview with Mr. Mobius.

Q It’s been a bloodbath for BRIC stocks and economies this year. Is there still opportunity there or should investors move on?

A There’s no question, they’ve bombed.

Overall, however, I think the BRIC countries will definitely have big comebacks, and they’ll do quite well, despite what we’ve seen recently. They’re huge, they have growth, and a lot of companies there are showing us sustained, strong earnings.

Q It’s also been a bad year to be a gold investor. Is the gold story over, or is this just a hiccup for the precious metal?

A There are really two markets in gold. There is the market price, and there is real demand. Market price is influenced by derivatives, by short sellers, by all kinds of actions by traders who are not taking physical delivery. And if you look at the recent downturn, imports into India went up, and physical demand went up. India is the largest importer of gold in the world, but gold prices still went down. So there’s a dichotomy between what’s happening in the market and what the real demand is.

My personal opinion is, this big downturn we’ve seen is an aberration and you’ll probably see a return to the long-term growth trend of gold. But in the short-term, there’s going to be a lot of pain, basically prices coming down and looking like they’re not going to stop coming down. But at the end of the day, the demand is there and supply is limited. The cost of mining is not going down, but going up. So I would say I’m reasonably bullish on gold.

Q Where do you see oil prices heading over the next few years?

A Demand is running at about 90 million barrels a day. The demand in developed countries is flat, but demand in emerging countries is going up, and it’s beginning to match developed markets. We believe the growth in emerging markets will continue to grow. Automobile consumption is one example. If you look at auto sales in China, India, they’re going through the roof. That’s one side.

The other side is what’s happening in fracking and oil sands. A lot of people are saying these things are going to be game changers, they’ll change the whole equation of supply. But if you look at the amounts involved, it’s hard to believe that can happen, because you have 90 million barrels a day in demand, but oil sands and fracking in North America is about 500,000 barrels. In the context of global oil demand, this can’t have a big impact.

For the rest of this interview, click here: