TORONTO, Aug 27 — CEF Holdings Ltd, a venture between Li Ka-shing’s flagship company and Canadian Imperial Bank of Commerce, is looking to invest in gold mining companies on expectation that prices will resume a rally.

“Long term, gold is a good place to be,” CEF chief executive officer Warren Gilman said in an interview in Hong Kong.

Cheung Kong Holdings Ltd, controlled by Li, Asia’s richest man, and CIBC each own 50 per cent of CEF.

The venture focuses on investing in resources companies globally.

Bullion is heading for its first annual decline since 2000 and has slumped 27 per cent from a record US$1921.15 (RM6,396) an ounce reached in September, 2011. JPMorgan Chase & Co. anticipates rising average gold prices in every quarter through the end of next year.

“I was a little uncomfortable making investment in gold at US$1,700 and US$1,800 an ounce,” Gilman said yesterday. “The correction we’ve had this year from my perspective is great because we can hopefully fulfill that objective of making some gold investments.”

CEF’s recent investments include debt facilities to Uranium Energy Corp. and Avanti Mining Inc., which is developing a molybdenum mine in Canada. Gilman declined to comment about CEF’s size or cash available for investments.

Gold for immediate delivery fell 0.5 per cent to US$1,398.24 an ounce at 10:29 a.m. Singapore time. The metal is down 17 per cent this year as the US dollar strengthened and amid concern that the Federal Reserve will begin cutting back its stimulus measures.

Price Outlook

Prices may stay between US$1,000 an ounce and US$1,400 an ounce for “a couple of years and that’s predominantly because gold has to get used to, and it still seems to be adjusting, to the taper and rising real interest rates globally,” Gilman said. He previously co-founded CIBC’s global mining group and was later vice chairman of the bank’s CIBC World Markets.

“It’s tougher and tougher to find economic gold deposits in safe jurisdictions,” Gilman said. “You see mine supply struggling to keep up with demand long term. That’s a great recipe for higher prices in the longer term.”

Gold mining companies have announced at least US$26 billion of writedowns in recent months and are seeking to sell assets after the metal’s price declined.

Gold Fields Ltd. last week agreed to pay US$300 million for three Barrick Gold Corp. mines in Australia. Norton Gold Fields Ltd., the Australian producer controlled by China’s Zijin Mining Group Co., said this month it’s seeking further acquisition targets as falling prices cut the value of mines. – Bloomberg