Growing debt to create inflation will drive gold price higher - Agnico Eagle
(Kitco News) - 2019 was the most bullish Sean Boyd, president and CEO of Agnico Eagle Mines, said he has ever been on gold and nothing that has happened in 2020 has changed that sentiment.
At the start of the year, Boyd was calling for gold to push past $2,000. In an interview with Kitco News, on the sidelines of the Denver Gold Forum, he said that he expects gold prices to continue to push higher through the rest of the year.
Boyd said that with all the money printing and growing government debt, it is not unreasonable to expect prices to push to $2,500 or even $3,000 an ounce.
"Here we are at $2,000 on the basis of rising debt levels, rising a lot faster than anyone expected. The economy's not keeping up to the growth in debt," he said. "There's two ways to go: austerity, which politicians don't have the courage for and the general public doesn't have the appetite for. So it's going to be spend more, print, more and try to create inflation. That is perfect for gold."
When it comes to driving economic growth, Boyd added that mining companies can be leaders when it comes to getting the global economy back on track after the devastation created from the ongoing global COVID-19 pandemic, according to one senior producer executive.
Boyd noted that gold production in the second half of the year is on track to hit pre-pandemic levels. Agnico Eagle's output in the second quarter was significantly impacted by government-imposed lockdowns that were implemented to slow the spread of the virus.
Boyd said that operations at eight of the company's mines were suspended because of the lockdowns.
"We've been forecasting production, Q3 and Q4, to be very similar to what we saw closing out 2019, which was a record quarter in terms of production," he said. "That's where we expect to be in terms of production, but at much higher gold prices, which will drive a lot of free cash flow here in the second half of 2020."
Boyd said that they have been able to get back to full production as the company has focused on protecting its employees and communities from the coronavirus. He added that early on, they implement health and safety protocols.
"What we're really focused on is clearly to protect the employees, keep the comfort level of our employees and their families high," he said.
One initiative Agnico Eagle did as the virus started to spread was to establish testing labs at mines to make sure employees didn't have the virus.
"I give credit to the leadership at the sites for sourcing out testing and for implementing that testing protocols that gave us that extra layer of protection," he said. "I think the government's really appreciated that leadership on testing."
He added that if mining companies continue to implement strong health and safety measures, there is no reason why they can't continue to work even if the pandemic does continue to spread.