It won't take much to drive silver prices higher as gov'ts print money - Americas Gold and Silver
(Kitco News) - A $2 trillion economic aid package continues to work its way through Congress and many investors are starting to look at the cost to fight the spreading coronavirus with one mining CEO saying that it will be good for precious metals prices.
Darren Blasutti, president and chief executive officer of Americas Gold and Silver
In a telephone interview with Kitco News, Darren Blasutti, president and chief executive officer of Americas Gold and Silver (TSX: USA), said that it is easy to be a long-term bull on gold and silver as central banks and governments pump the global economy with massive capital.
Earlier this week, as Congress was putting together its aid package, the Federal Reserve announced an open-ended quantitative easing program. Economists expect that deficit speding could rise to between 10% and 13% of GDP, well above the levels seen in the 2008 financial crisis.
“You can ’t ignore how much it ’s going to cost to combat this virus. The economic costs are going to be astronomical,” said Blasutti. “This is going to be good for gold and silver and the precious metals miners.”
While the mining company has positioned itself to be equally weighted in gold and silver, Blasutti said that he is slightly more bullish on silver compared to gold.
Silver has been significantly beaten up with prices recently dropping to an 11-year low as the spreading coronavirus has substantially dampened global economic growth, which in turn has weighed on silver ’s industrial demand.
However, Blasutti said that people should be paying more attention to silver ’s investment demand more than its industrial uses. He added that the higher gold prices go, the more attractive silver looks.
“The reality is that as an investor, you can ’t buy silver anywhere,” he said. “It ’s going to take very little investment demand to drive silver prices higher.”
Although the long-term outlook for gold and silver prices and precious metals miners looks good, Blasutti said that the industry and market have to get through this short-term uncertainty.
He added that investors should potentially be looking at producers as they are expected to weather the current storm. He said that for producers, the gold and silver aren ’t going anywhere and once the health and economic crisis have passed, production should ramp up fairly quickly.
Americas Gold and Silver, Blasutti said, is in a good position. He explained that in Nevada, gold mining is considered an essential service. He said that the company ’s Relief Canyon mine is close to commercial production after its first pour reported last month.
Similar to other producers, Americas Gold and Silver has enough access to credit and capital to weather this storm for a year, he said.
“It ’s going to be tough times and it ’s going to be looking at individual companies rather than the entire sector,” he said. “If you are producing, you are going to have access to capital to keep the lights on. You may not like the terms, but you will survive.”
The portion of the mining sector that Blasutti said he thinks will suffer the most are the companies that are currently building mines. Government lockdowns mean that these companies are losing money on idled construction equipment.
Finally, Blasutti said that mining companies that are still working in the current environment need to show strong leadership and follow all recommended safety protocols.
“If mining companies don ’t take the appropriate safety measures and the virus spreads at mines, then they could be shut down and that is something we don ’t want,” he said. “We have the opportunity to lead and show the world that we can safely protect our workers.”