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Gold Prices Need To Be Higher Before Investors Look At Miners - Sandspring CEO

Kitco News

(Kitco News) - Gold prices need to push higher before investor optimism flows back into the mining sector, according to one mining executive.

In an interview with Kitco News, Rich Munson, CEO of Sandspring Resources, said that although the physical metal is attracting new investor attention, it has still been difficult for junior miners to find much-needed capital.

Rich Munson, CEO of Sandspring Resources

“With so much market uncertainty, gold looks really attractive right now but prices are still lower than they were a year ago,” he said. “The mining sector still needs to see higher prices. I think that is the biggest factor right now.”

He added that investors need to see a little more conviction of a stable uptrend before they move back into the mining space. He noted that investors appear to be more cautious as their enthusiasm in previous years turned to disappointment because of the lack of sustainable momentum in the gold market.

Munson’s comments come as gold prices continue to hold above the critical psychological level at $1,300 an ounce. April gold futures last traded at $1,320.20, up 0.49% on the day.

“If we could see gold prices sitting at $1,350 in 2019, then I think the sector is back,” he said. “If prices fall back below $1,200, it will be difficult for a lot of projects to move into production.”

However, Munson said that he is optimistic that gold prices will continue to push higher as the U.S. dollar will be unable to maintain higher levels as low growth fears weigh on investor sentiment.

“I think once the U.S. dollar starts to turn, gold is going to be the only safe-haven asset investors can turn to,” he said.

Munson added that it is difficult to have strong conviction in the U.S. dollar or any global currency when global debt is at record highs in a low-growth environment. Quoting international reports, Munson said that gold prices last year hit record highs against 72 currencies.

“I think the next market to turn will be the U.S. dollar,” he said. “It’s only a matter of time before we see gold prices move higher against the dollar.”

Munson added that central banks' growing appetite for the yellow metal is also another sign of long-term price sustainability. He said that it looks like central banks are boosting their gold reserves to protect their currencies as nations push closer to a global debt crisis.

Sandspring continues to develop its Toroparu property in Guyana, embarking on a project re-scope that would reduce its upfront capex costs to push closer to production. Munson said that if gold prices continue to push higher, he could see initial production in 2023.

With a resource of more than 10 million ounces, Toroparu is the largest undeveloped gold deposit in South America.

“In an environment of depleting resources, Toroparu is too significant for the market to ignore for very long,” said Munson. “We just need to see higher prices to make this project really exciting.”

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.