Peter Marrone, chairman of Toronto-based Yamana Gold Inc., isn’t betting that a bull run is just around the corner even as gold prices soar to their highest point in a half-decade.
His cautious attitude about rising bullion prices is not unusual in a sector that is still suffering the hangover effects from the last time prices broke out. That was in the aftermath of the 2008 financial crisis, and gold mining companies used the added revenue for a shopping spree that left many with debt that has still not been fully paid down.
Now, after several weeks in which gold prices have hovered around US$1,400 per ounce — a threshold not crossed since 2013 — some gold bugs believe a United States-China trade war and continuing low interest rates will push prices even higher in the immediate future.
Yet many mining executives are adopting a chastened tone, swatting away chatter about potential mergers and focusing instead on cost-cutting and organic-growth initiatives.
“I am convinced that the market will reward companies that stick to their knitting,” Marrone said. “This time around, executives at mining companies learned from the last time around.”