CEF Holdings, a venture between Li Ka-shing’s flagship company Cheung Kong and Canadian Imperial Bank of Commerce (CIBC), is planning to invest in gold mining companies following a decline in gold prices in the recent months.
Established in 1974, CEF mainly focuses on investing in resources companies around the world.
CEF Holdings chief executive Warren Gilman said gold is a ‘good place to be’ in the long-term.
"I was a little uncomfortable making investment in gold at $1,700 and $1,800 an ounce," Gilman said. "The correction we’ve had this year from my perspective is great because we can hopefully fulfil that objective of making some gold investments."
With a steep drop in gold prices and a surge in production, mining companies have written down around $26bn and are seeking to sell assets in a move to restore profitability.
The price of gold dropped by 16% this year, which compelled investors like John Paulson and George Soros to sell gold amid job cuts in mining companies and lower valuation of mines.
Debt investments were recently carried out by CEF in Uranium Energy and Avanti Mining, which is presently developing a molybdenum mine in Canada.
Gilman was quoted by Phoenix News Media as saying, "the future to be found in a secure area with economic gold deposits will become increasingly difficult.
"Long-term mining enterprises will get gradually stronger as supply can not meet demand in the long run; this series of factors will push gold higher."
Last week, South African miner Gold Fields inked a deal to buy Barrick Gold’s three Australian mines for $300m.