GOLD investors including billionaires Naguib Sawiris and John Paulson, have published an open letter to the industry asking producers to improve performance on issues ranging from executive pay to investor relations, said Bloomberg News.
“Though the performance of gold mining stocks has been noteworthy recently, we believe that performance continues to fall short in the areas of corporate governance, alignment of incentives and strategic vision & communication with investors,” the group said in the letter released on Sunday.
Gold investors including money managers at Franklin Templeton, CI Investments and members of the Shareholders’ Gold Council – spearheaded by Paulson & Co. at the Denver conference in 2017 and formally launched a year later – said some directors were not aligned with shareholders as too few shares were issued to them.
Some 16 points of improvement were recommended in the letter. “Though the performance of gold mining stocks has been noteworthy recently, we believe that performance continues to fall short in the areas of corporate governance, alignment of incentives and strategic vision & communication with investors,” the group said.
A key matter was returning cash to shareholders during the up-cycle. The gold price was regularly burst through $2,000/oz this year as investors flock to its wealth preservation characteristics amid wide-scale government stimulus efforts that involve issuing money.
“Despite strong performance, mining shares are still episodically inexpensive,” the group said. “We believe that adoption of these suggested measures will improve current low equity valuations by attracting a wider audience of generalist investors and thereby lower the industry’s cost of capital to the benefit of all stakeholders.”
