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Serious money is betting against the US dollar - Wheaton Precious Metals' Randy Smallwood

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(Kitco News) - Despite the current selling pressure, one mining executive continues to see resilience in the marketplace, and it could be only a matter of time before gold and silver push back to all-time highs.

In a recent interview with Kitco News, Randy Smallwood, CEO of Wheaton Precious Metals (NYSE: WPM), said he remains optimistic that gold prices can regain their luster and their bull-market run. He added that investors should keep an eye on silver if they want to know when gold is ready to move.

Smallwood noted that despite the solid selling pressure in the precious metals market, silver has held key support levels. Despite four weeks of falling prices, silver has managed to hold support at around $22.50 an ounce.

At the same time, December gold futures have managed to hold support above $1,920 an ounce. Smallwood said he sees gold and silver building a solid foundation at current support levels. December gold futures last traded at $1,924.20 an ounce. At the same time, September silver futures last traded at $23.

“I continue to scratch my head at why silver hasn't moved, but perhaps it's because we're not in a precious metal bull cycle yet,” he said. “The fact that the silver price is where it is supports that argument: we have much more upside in the market. Every precious metals’ bull market that we've seen in history usually starts with gold going for a run, gradually increasing, and then silver wakes up and as gold hits its peak, silver shoots past it and outperforms

Smallwood said that he is not surprised gold and silver are finding support at elevated levels as both precious metals have sound fundamentals. He noted that the growing de-dollarization trend in the global marketplace remains an essential pillar of support for gold.

The comments come as Brazil, Russia, India, China and South Africa, known as the BRICS nation, host a world summit to potentially increase their ranks. Analysts expect that gold will play an important role as a monetary metal and source of value among BRICS nations.

“I do think the BRICS summit demonstrates that there is serious money betting against the US dollar remaining the world’s reserve currency,” he said. “If any currency is going to compete with the U.S. dollar as a reserve currency, it needs to be backed by gold.”

Looking at silver, Smallwood said that it is impossible to be bearish on silver when you look at the metal’s long-term fundamentals. He added that the world will not be able to reach its net-carbon neutral goals without more silver.

“Silver is going to see increasing industrial demand and what it really needs is for investors on the retail side to wake up a little bit,” he said. “When that happens, you will see what silver does best.”

Along with gold’s long-term fundamentals, Smallwood said that even in this lackluster environment, there is growing investor interest in the precious metals market.

Smallwood said while on promotional tours in North America and Europe, about 40% of the people they talked to were potentially new investors.

“There is definitely an elevated interest in gold and silver. While it might not be translating into direct demand right now, that could change fairly quickly. Everyone is watching and waiting and repairing and trying to understand a bit more about the space,” he said. “Gold is getting set up to play a bigger role in the global economy.”

Smallwood’s comments come after Wheaton Precious Metals reported solid second-quarter earnings. The precious metals streaming company said it generated $265 million in revenue, $202 million in operating cash flow, $141 million in net earnings and $143 million in adjusted net earnings in the second quarter of this year.

The company said its revenues were down 12.5% from the second quarter of last year. At the same time, the company said it produced 147,699 gold equivalent ounces (GEO) in the second quarter, a decrease of 5.3% compared to Q2 2022.

However, Wheaton said that its cash operating margin came in at $1,487 per GEO sold, an increase of 8% compared with the second quarter of 2022. The company added that its increased margin resulted from a higher-realized price per ounce.

Smallwood said that his company is on track with its long-term growth potential. He added that the company wants to boost its annual gold production of over one million ounces.

“I truly believe that we're on a path to make Wheaton incredibly unique and standalone in the precious metals space,” he said. “In the first quarter conference call, I said: ‘We will have growth every quarter for the next five years and we are following through with that.’ In nearly 20 years, I've never been more excited about where our company is going and what we have coming at us over the next five years.”

Gold price outlook remains bullish but record highs pushed out to the end of Q1 2024 - ANZ

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