SIDEX is a fund that invests exclusively in junior exploration companies in Quebec, Canada. Since inception, the fund has grown by nearly three times.
“The $50 million that was injected 20 years ago by our limited partners…since then we’ve returned $16 million, leaving a net money at play of $34 million, and our fund today is valued at about $95 million,” said Paul Carmel, CEO of SIDEX.
The fund has two primary mandates.
“For 20 years, we’ve had this dual mandate of number one, earning a return for our investors, which we have, and also providing some oxygen to the exploration companies,” he said.
SIDEX is a long-only fund and does not use embedded hedging strategies.
On gold, the eventual dissipation of COVID-19 will ease the need for safe haven assets, but tailwinds from accommodative policy will still provide the balancing force, Carmel noted.
“The whole COVID thing plays into it. Once that gets settled, and it will, gold might take a breather but I think the structural forces underpinning gold will continue to march forward. I think gold’s in a long-term uptrend here,” he said.
Carmel noted that gold and the miners have already had a good run, and investors should be mindful of the sector’s cyclicality.
“After a long drought in the sector we’ve had a pretty good upward move, and I’ve been in the business long enough to know that it’s a cyclical business, it doesn’t go up forever, but there could be a bit of a breather. That’s not to say that it won’t continue or go much higher,” he said.
Additionally, deposits around the world, and in particular in Quebec, are dwindling, and it’s becoming harder to not only find economical deposits but also to mine them, Carmel said, while the demand for metals will continue to march higher.
“I think it leads, in my mind, that the next commodity cycle could be quite dramatic,” he said.