Gold bull McEwen says price rally has just begun

Gold bull McEwen says price rally has just begun

The former investment banker has always believed in gold, to the point he’s founded two bullion producing companies so far: McEwen Mining and Goldcorp. (Image provided.)

Robert McEwen, one of the gold’s industry’s best-known bulls, is predicting that the precious metal will continue to surge this year, closing 2017 much higher than today’s prices of around 1,290 an ounce.

The former investment banker, who for years have made bold predictions when it comes to precious metal prices, is sure that bullion will reach $5,000 an ounce, though, he warns, that won’t happen “immediately.”

“The metal is in an upward trend now and while it has years to go before it peaks, gold will continue to climb higher. It won’t be a straight line, but the direction is definitively up,” he told MINING.com.

The executive has never stopped believing in the shiny yellow metal. “Gold is money. It’s the ultimate currency. It’s a store of value that has gone for millennia,” he said, adding that it’s “one of those items” that investors should always have in their portfolios.

“If you don’t have interests in gold, you should give it serious consideration right now,” is his advice. So far, his faith in the metal has paid off. Low prices knocked him off the Canadian Business’ Rich 100 ranking in 2015, but last year, his company soared more than 170% as prices rose again and he made it back.

"Gold is money. It’s the ultimate currency. It’s a store of value that has gone for millennia." — Robert McEwen.

“2016 was a very good year for McEwen Mining. The best,” he said. “The firm doubled its treasury size, without resorting to financing (we haven’t done that since 2013), selling royalties, borrowing money, selling metal streams, or incurring in debt,” he noted.

McEwen not only has positive cash flow but year to date, the stock is up 6% in Toronto (TSE, NYSE:MUX) and almost 8% in New York as of close Thursday.

On Wednesday, the company received fresh good news after Lexam VG Gold Inc. (TSX:LEX), a junior exploration company with four brownfield properties in advanced exploration stage, voted in favour of being acquired by McEwen.

The legendary mining executive knows how to take gold mining companies to the next level, having built Goldcorp (TSX:G) (NYSE:GG) into a major producer before stepping down as chairman and CEO in 2005.

Now, he’s working on expanding McEwen Mining Inc., with has producing mines in Mexico and Argentina.

Gold bull McEwen says price rally has just begun

El Gallo silver-gold mine in Sinaloa, Mexico. (Image courtesy of McEwen Mining)

As part of that plan, he aims to conduct further exploration on the assets inherited through the acquisition of Lexam, all of them located in the heart of Timmins Gold Camp, northern Ontario, Canada, one of the world’s most prolific gold producing regions, with over 70 million ounces delivered to date.

The idea, he said, is to move them towards construction as soon as possible. He also hopes to receive a permit for its company’s Gold Bar project, in Nevada, in the third quarter of this year, with construction to start shortly after, in Q4.

His goal is to take McEwen Mining to the Standard & Poor's 500 Index, which groups the 500 largest companies that list either in the NYSE or NASDAQ. In order to qualify, the firm needs a larger maker capitalization.

McEwen said he expected to achieve that over the next three years with a combination of organic growth in production as well as mergers and acquisitions.

Gold prices, at least for now, are on his side. The metal stretched its rally into a third straight session Thursday, as losses in the US dollar lifted gold to its highest finish in more than five months, closing at 1,287 an ounce.