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$1,400 Gold Will Breathe New Life Into Miners - Randy Smallwood

Kitco News

(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.

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.