Last year was most likely the height of gold miner prosperity, said mining analyst Mickey Fulp, who doubts that a period with high gold prices married with lost energy costs will ever reoccur.
On Tuesday Fulp, who runs the Mercenary Geologist, spoke to Kitco at the Vancouver Resource Investment Conference.
Fulp warns that oil prices are high and will remain high. Oil is going to be a key energy source for a long time to come, said Fulp.
"Q3 of 2020 was the height of gold stock prosperity. I'm not sure we'll ever see that again, because inflation and input costs have caught up. Before, margins were still very high, because we didn't have these increases in energy and labor costs," said Fulp. "The world runs on oil. Oil is still king. It's going to be that way for my lifetime, and I would submit in your children's lifetime."
In March oil prices jumped to over $100 a barrel at the start of the Ukraine-Russia war. Gold miners have been on tear due to near record highs for the metal, which rallied near the start of the pandemic. In recent quarters some miners are flagging cost pressures that are shrinking margins.
In addition to costs, Fulp is also worries that the mining sector faces too many regulatory hurdles, citing Trilogy Metals which saw its access road to its Ambler project in Alaska held up by regulators, and Hudbay Minerals' $1.9-billion Rosemont copper mine in Arizona facing its own regulatory hold ups.
"I am basically exiting the junior resource space. I am very bearish," said Fulp.
