Mining executive Rob McEwen spoke with SmallCapPower correspondent Angela Harmantas recently, with the former Goldcorp CEO talking about his company McEwen Mining bouncing back from a robbery, explaining how junior gold miners can remain profitable in this environment and what is driving his belief that the gold price will bounce back in a big way.
Rob McEwen is one of the more vocal members of a diminishing minority of gold bugs. He certainly has the experience to back his claim that gold will hit US$5000 an ounce in the not-too-distant future: over his 25-year mining career, he grew Goldcorp into a multi-billion dollar company that ranks as one of the world’s largest producers of precious metals. Today, as the Chairman and Chief Owner of McEwen Mining (TSX: MUX), he is hoping to achieve the rarified status of becoming one of only two gold companies on the S&P 500 (the other being Newmont Mining).
There have been a few setbacks for McEwen Mining this year, however. In April, a brazen robbery occurred at the company’s flagship El Gallo 1 mine in Mexico, a loss of nearly $8.4 million in revenue. And the beating that gold stocks are taking in the market thanks to a depressed gold price has caused MUX shares to fall to levels that threaten its inclusion on the NYSE. In addition to these insular challenges, the entire gold industry is struggling to maintain a positive outlook as gold plummeted recently to less than US$1100 after China dumped nearly 5 tons of bullion and Morgan Stanley analysts predicted gold could soon hit $800.
The market may have been unkind to gold miners so far in 2015, but Rob McEwen has seen more than a few cycles over the length of his career. His belief in the fundamentals of the precious metal remains firm, and as a 25% shareholder of MUX, there is much at stake for him personally. In an interview with SmallCapPower.com, Rob McEwen shares how MUX bounced back from the robbery, how junior gold miners can remain profitable and why he thinks that the gold price will bounce back in a big way.
You’re steadfast on your $5000 gold price target despite the fact that gold has dropped steadily over the past year. What are the signs you’re seeing that justifies this price in the longer term?
Investors seem to be very complacent. The velocity of money has slowed considerably – it’s actually the lowest it’s been in 60 years. The Dow Jones Industrial Average and NASDAQ are reaching higher highs but the number of people participating in the market has decreased. A lot of companies are doing buybacks rather than improving their productivity. I do think we are seeing inflation and even though the government is claiming that there’s no inflation, there are very few items going down in value.
For the rest of this interview, click here: http://www.smallcappower.com/posts/rob-mcewen-interview-28-07-2015