Mineral & Financial NAV grows as it increases precious metal holdings

The AIM-traded firm said its total net asset value stood at £6.03m at period-end on 31 March, 6.1% over the second quarter.

It said it increased its overweighted holdings in the precious metals sector in the third quarter, adding that the Cerrado Gold investment was now publicly listed, which generated “excellent” performance.

A follow-on investment in Ideon Technologies was also made in the quarter, after a 267% rise in value in nine months.

“The global sentiment and expectations have been on a roller coaster since February 2020,” the company’s board said in its statement.

“One year ago, we entered the first phase of the Covid-19 crisis, whose impact expanded thereafter.

“Fiscal and monetary policies became highly ‘accommodative’ to avert an even greater economic crisis than the one felt.”

Mineral & Financial’s directors said the reaction from governments to the coronavirus crisis forced an abandonment of financial discipline that had “selectively initiated” after the “financial ravages” of the global financial crisis of 2007 and 2008.

“Today, at the beginning of June, we believe that the market sentiment is highly euphoric.

“We also believe that equity markets seem to want to move beyond the economic damage caused over the last 18 months by Covid-19 restrictions and focus solely on the potential, and still entirely hypothetical, growth in its aftermath.

“By the end of March, the S&P 500 is up 53.7% year-over-year, while the Shanghai CSI 300 Index - whose underpinning economy was less impacted by Covid-19 - is up 37% in the same timeframe.”

Interest rates, as measured by the 10-year government bond yields, during the 12 months from 31 March 2020, were up 159.4% in the UK, 155.8% in the USA, 139.2% in Australia, and similar rates were up 129.4% in Canada, the board noted.

“This ‘extreme exuberance’ is fuelled by the government's various economic stimulants, all of which, we believe, will need to be paid for with higher tax revenues.

“However, we are of the view that rising equity markets coupled with rising interest rates are incompatible over the long-term.

“One will, in our opinion, need to give way to the other.”

At 0958 BST, shares in Mineral & Financial Investments were up 10.64% at 13p.