The Gazette: A simply precious idea (January 16, 2009)
‘GOLD IS MONEY’ Metal yet to reach its peak: US Gold CEO
There is no time like the present to gather gold for one’s portfolio, says one of North America’s high-profile gold enthusiasts, who predicts the glittering metal has yet to reach its peak.
“Gold is money, paper isn’t,” Rob McEwen, founder and former CEO of Goldcorp Inc. and current CEO of U.S. Gold Corp. and Lexam Explorations Inc., told a luncheon gathering composed largely of brokers yesterday in Montreal.
In their “attempts to appease everybody who says, ‘Bail me out,’ ” governments are printing money at an alarming rate, McEwen told members of the AMEX Club.
This trend leads to “incredible devaluation” of those currencies and governments will get into “competitive devaluation” in a bid to gain a competitive advantage, he said.
Investors will increasingly turn to gold as a safe haven or store of value, said McEwen, whose presentation included a chart showing how gold has fared against major currencies since 2001.
From 2001 to 2004, it rose 58 per cent against the U.S. dollar; from 2001 to now, it soared about 221 per cent, according to his figures. Comparable figures for the loonie were 28 and 143 per cent.
In 2001, when McEwen was at the helm of Goldcorp – one of the lowest-cost gold producers in the world – the company started to withhold gold because, in part, he felt the metal was undervalued.
“Gold was $270 (an ounce) when we started doing it. At one point, Goldcorp had more gold than 50 of the 150 central banks in the world that held gold,” he said.
“I felt it was going to hit $850 by 2008 – which it did. I believe it will hit $2,000 by the end of 2010 and, before this cycle is over, we are going to see it go through $5,000 (U.S.),” McEwen said.
But investing in gold is not for the faint of heart. Over the last century, the metal’s price has peaked and plunged many times, with decades of relatively low value compared with equities, as another chart showed.
The global slowdown and crisis in financial markets are being keenly felt in the mining sector, particularly by junior miners who need capital for exploration.
U.S. Gold, which is burning through $1 million a month on exploration in Nevada and Mexico, is among those that will have to raise capital this year, McEwen said.
Consolidation will be a byword of the industry, he added. And much of that will be done on a “regional basis,” with companies seeking to acquire properties in regions selected for their promise as well as their policies and overall security.
“The seniors are leading and are going to be leading (consolidation) because they have the income stream, but it will be the juniors who will ultimately lead industry consolidation,” he said.
While the mining and mineral exploration sector has lost its effervescence of recent years, exploration continues and key discoveries will be made, said McEwen, whose company Lexam is involved in joint venture exploration for uranium in the James Bay region.
“And innovation occurs during times of duress,” he said in an interview. “The mining industry is very slow to change and could greatly benefit from new technologies.”
There is no time like the present to gather gold for one’s portfolio, says one of North America’s high-profile gold enthusiasts, who predicts the glittering metal has yet to reach its peak.
“Gold is money, paper isn’t,” Rob McEwen, founder and former CEO of Goldcorp Inc. and current CEO of U.S. Gold Corp. and Lexam Explorations Inc., told a luncheon gathering composed largely of brokers yesterday in Montreal.
In their “attempts to appease everybody who says, ‘Bail me out,’ ” governments are printing money at an alarming rate, McEwen told members of the AMEX Club.
This trend leads to “incredible devaluation” of those currencies and governments will get into “competitive devaluation” in a bid to gain a competitive advantage, he said.
Investors will increasingly turn to gold as a safe haven or store of value, said McEwen, whose presentation included a chart showing how gold has fared against major currencies since 2001.
From 2001 to 2004, it rose 58 per cent against the U.S. dollar; from 2001 to now, it soared about 221 per cent, according to his figures. Comparable figures for the loonie were 28 and 143 per cent.
In 2001, when McEwen was at the helm of Goldcorp – one of the lowest-cost gold producers in the world – the company started to withhold gold because, in part, he felt the metal was undervalued.
“Gold was $270 (an ounce) when we started doing it. At one point, Goldcorp had more gold than 50 of the 150 central banks in the world that held gold,” he said.
“I felt it was going to hit $850 by 2008 – which it did. I believe it will hit $2,000 by the end of 2010 and, before this cycle is over, we are going to see it go through $5,000 (U.S.),” McEwen said.
But investing in gold is not for the faint of heart. Over the last century, the metal’s price has peaked and plunged many times, with decades of relatively low value compared with equities, as another chart showed.
The global slowdown and crisis in financial markets are being keenly felt in the mining sector, particularly by junior miners who need capital for exploration.
U.S. Gold, which is burning through $1 million a month on exploration in Nevada and Mexico, is among those that will have to raise capital this year, McEwen said.
Consolidation will be a byword of the industry, he added. And much of that will be done on a “regional basis,” with companies seeking to acquire properties in regions selected for their promise as well as their policies and overall security.
“The seniors are leading and are going to be leading (consolidation) because they have the income stream, but it will be the juniors who will ultimately lead industry consolidation,” he said.
While the mining and mineral exploration sector has lost its effervescence of recent years, exploration continues and key discoveries will be made, said McEwen, whose company Lexam is involved in joint venture exploration for uranium in the James Bay region.
“And innovation occurs during times of duress,” he said in an interview. “The mining industry is very slow to change and could greatly benefit from new technologies.”
