Incoming Goldcorp CEO doesn’t expect metals rebound in 2016 – by Ian McGugan (Globe and Mail – December 30, 2015)

Gold’s persistent weakness isn’t over yet, according to the incoming chief of the world’s most valuable gold miner.

David Garofalo, who takes over as chief executive officer at Goldcorp Inc. in April, says the precious metal is still emerging from the end of a long period in which it benefited from interest rates that declined to near zero.

Gold, which pays no dividend, shines as a store of value when other investments also produce no yield in real, or after-inflation, terms. However, it loses lustre as competing assets begin to offer higher payouts.

“Right now, gold prices reflect the reality that real interest rates have nowhere else to go but up,” Mr. Garofalo said. He added: “Gold prices over the next couple of years may struggle because of the reality of the interest-rate environment.”

The executive, a former winner of the Northern Miner’s Mining Person of the Year award, emphasized that he remains very bullish on gold in the medium to long term. However, his wariness about what the next year or two may hold isn’t restricted to just precious metals.

Base metals such as copper and zinc are also under pressure, he says. Investors who are hoping for a quick bounce-back in raw materials prices after a horrific 2015 may want to think again.

“I wouldn’t think there will be a rebound [in 2016] to be honest with you,” he said. “Particularly in the base metals space, we probably have got a couple of years of grinding ahead of us.”

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