Frank Holmes is chairman, chief executive officer and chief investment officer of U.S. Global Investors, a registered investment adviser which boasts early starts: it created the U.S.’ first no-load precious metals fund, and launched the China Region Opportunity fund in February 1994.
In cnbc.com’s exclusive OUTLOOK '07 series, Holmes spoke with CNBC’s Carl Quintanilla about oil, food and why gold may be the new copper.
Holmes said that despite the dizzying rises in commodities over recent years, there is no bubble-burst ahead. He describes the basic-materials market as “in the throes of a soft landing.” And he offers a safety net, as everywhere in the world, “people need to eat and build.”
The CEO/CIO described other commodity “demand-drivers” in the form of government policies and “the ‘Chindias’ [i.e., China and India] of the world.” Discussing the two giant nations’ voracious appetites for resources, he quotes Newt Gingrich as jesting that, “In New York City, it takes 22 years to build an airport extension; in China, 22 months.”
Surprisingly, Holmes says one of the most misunderstood nations is Colombia, which he lauds as “a fantastic country.” Maintaining that there are “more kidnappings in Mexico City than [Colombian capital] Bogota,“ he declares that “we’ve made a lot of money in oil and gas there.”
The fund manager says U.S. Global Investors is “very cautious” on copper, underscoring America’s declining housing starts and auto sales – and he declares that his firm is “much more bullish on gold.” He points to a psychological factor buttressing the precious metal, as well as its value as jewelry and money.
And check your maps: Holmes muses that Dubai’s Lower Manhattan-like financial-district skyscraper project – 50 buildings, slated to be 50 stories each -- will render the island-nation “the Switzerland of the Middle East.”