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Catalysts will kick in for $2000 gold as inflation pulls back - Eldorado's George R. Burns

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(Kitco News) - Gold prices will take off when inflation pulls back, and the blockchain will grow the gold market significantly in the coming years, according to George R. Burns, President and CEO of Eldorado Gold.

“It's tough to predict exactly how the market is going to react and when,” he said. “We will see gold break through $2000, and if I was guessing, it's probably as the inflationary fears go away and some of these other catalysts come in line.”

Burns spoke with Kitco News journalist Ernest Hoffman at the recent PDAC 2023 mining convention in Toronto, where he said that he believes the application of blockchain technology to the physical gold market will be a significant driver of growth.

“I'm a believer in the World Gold Council’s 24/7 Gold, where we're working on getting transparency around gold to the point where you could purchase gold on a cell phone, much like Bitcoin, but it would be backed by gold metal,” he said. “What we're working on is to be able to trace and have governance over gold, from us as miners mining the gold, through smelters, refiners and the consumers of gold.”

Burns said this would give purchasers the confidence that their gold has been produced in a safe, environmentally and socially acceptable way. “I think that could be an important catalyst in the next couple of years as that gets rolled out.”

He also sees the current heightened interest in base metals as a net positive for the mining industry, and for his company in particular.

“I think it's something complementary,” he said. “In the case of Eldorado, we're about 80 percent gold and 20 base metals, and the 20 is predominantly going to be copper. The most important part is we're going to see our all-in sustaining and cash costs drop dramatically, because the Skouries mine that's under construction, the copper byproducts pay all the operating, all the sustaining costs, so gold is essentially free cash flow.”

He expects that both the gold and the copper from the project will be in high demand once the new mine starts producing. “I think copper is going to be an important part of electrification of the planet, and our operation in Greece will be in a good location where Europe's looking to solidify their electrical network given the impacts of the Ukraine war,” he said. “We're going to be coming on stream at a perfect time in terms of investment sentiment in gold.”

Burns said that energy remains the only significant impact they’ve felt on their operations from the war in Ukraine.

“In Europe, and in Turkey, the lack of natural gas coming from Russia has pushed up energy prices,” he said. “Our cost for electricity has roughly doubled from two years ago and electricity is about 10 percent of our operating costs. I believe that's going to come under control in the next couple of years. We've seen costs actually come down, and we've received subsidies both from the Greek state and the EU to control those costs while they work on various energy strategies to be less reliant on natural gas.”

Regarding the valuations of mining companies, Burns said that while miners face unique environmental and social risks and operate in challenging jurisdictions when compared to other sectors, he believes the stocks will recover as the overall market improves. “My own view is that you've seen the overall stock market come down, and as we get a hold of inflation, things get back to normal, I think you're going to see the gold stocks move with the entire market.”

He also believes that all the gold purchases being made by banks provide further support for the precious metal. “I think that's a good base for the industry,” he said. “And you look at the gold price that's been performing pretty well this year in spite of inflationary pressure, in spite of recessionary fears. I think we're at a good time for the gold space.”

To hear more of Burns’ analysis of the mining sector and the precious metals market, watch the video above.

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.