The Real Winners Of A Gold Price Rally, According To Expert
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(Kitco News) - Gold’s rally in June could spark a new rush to raise capital from miners, said Brent Cook of Exploration Insights.
“What we’re likely to see is some interest in terms of the share price rising, but we’re also going to see a rush of companies running to their bankers hoping to raise money with this increase in the gold price,” Cook told Kitco News.
Cook’s comments come as gold climbed to multi-year highs, with the price falling back down below $1,400 Monday.
Cook said that the price rally could continue.
“We’ve seen some major moves and there are some fundamental reasons behind that move in the gold price that I think are set to continue,” he said.
As interest in miners “trickle” down from senior producers to the smaller companies, mid-tier and junior miners are likely to outperform, he said.
“Mid-tier companies recognize they can’t replace their current reserves with economic deposits, and they’re going to be fishing down into the junior sector looking to pick up resources or probably, more importantly, solid prospects run by good junior companies that offer the potential to a major discovery, something they can look at putting into production ten years down the road. That’s really where the money’s going to go eventually, I think,” he said.
However, gold production is not likely to increase on the back of higher gold bullion prices. On the contrary, diminishing reserves means less production long-term, said Cook.
Despite his positive outlook on gold prices, Cook said he prefers the miners over physical bullion right now.
“They’re two different investment scenarios. The physical gold, you’re holding in case of a complete disaster. The miners, you’re speculating on an increasing gold price and that gives you much more leverage,” he said.