$1,400 Gold Will Breathe New Life Into Miners - Randy Smallwood
(Kitco News) - Gold prices pushing to their highest level in five years should breathe some new life in the mining sector that continues to struggle to attract investment capital, according to one gold sector executive.
Randy Smallwood, CEO of Wheaton Precious Metals
In a telephone interview with Kitco News, Randy Smallwood, CEO of Wheaton Precious Metals (NYSE: WPM, TSX: WPM), said that he thinks gold has more room to run higher, even after its impressive rally with prices within striking distance of $1,400 an ounce, up more than 3% on the day.
However, he added that the gold market needs more than one day of higher prices to revive a struggling sector.
“It’s an interesting day but I want more than an interesting day, I want an interesting year, an interesting decade,” he said. “I hope this is the first step in a very long staircase.”
The dearth of investment capital during the last few years, particularly among junior explorers and mid-tier producers, has created a production problem within the gold market, said Smallwood.
“We see the impact the lack of investment is having on the mining sector. We see it in our portfolio of opportunities. There are just no big projects out there,” he said. “The industry has not invested in itself because prices have been too low.”
Smallwood added that $1,400 is the level the mining industry needs to see to stay alive.
“At $1,400 you will see companies take on some production risks to bring some projects on line,” he said.
Looking ahead, Smallwood said that he is optimistic that gold prices will continue to move higher as global interest rates continue to fall, with some markets seeing a deeper dive into negative territory.
“As we see bond yields continue to fall, that will force investors to bring hard stores of value, like gold, back into play,” he said.
The gold market has had a particularly positive June as markets have aggressively priced in looser Federal Reserve monetary policy. Gold’s latest spike came after the U.S. central bank opened the door to a rate cut as early as June, following its monetary policy meeting Wednesday.