Expect New Record Highs in Gold This Summer

With gold and silver mixed, today King World News interviewed one of the top CEO’s in the mining world, Sean Boyd of Agnico Eagle which boasts a market cap of $11 billion.  When asked about where gold is headed Boyd replied, “Well the conventional wisdom here is that the summer should be quiet like it’s typically been.  I think this summer will be different because people are viewing it under the old parameters where you would have a quiet period from a North American perspective because it is summer.  But the real buyers of gold are not in North America and they don’t view the market the way people used to view it five, ten, twenty years ago, and that’s coming out of the far east.”

Boyd continues:

“Here we are, gold was supposed to be weak a few weeks ago, it pulled back to $1,475.  Now we’re here at $1,550, I think this summer we’re going through $1,600.  So I don’t think it’s going to be a quiet summer at all, I think we are going to set a new record.  As we move into the fall we are going to see $1,800 because the buying is coming out of the far-east.  You could get to the point where you get China and India consuming two thirds to three quarters of the annual mined output, the demand has been so strong over there.

Look at how the Chinese have played it, they established the Shanghai Gold Exchange and that was the start of them setting up the conditions for not only the citizens of China to own more gold, but also the authorities and the central banks.  India demand has been strong as well.  We’ve also had more buying recently coming out of central banks.  Here we have deliberate buying coming out of several central banks and you have central banks like China who are vastly underweight gold and they will continue to be buyers on weakness.”

When asked about silver specifically Boyd stated, “Well the last time I was interviewed I said silver would get up to $50 and I was even surprised at how quickly it happened.  It did get ahead of itself, but I don’t think there is any reason to believe it cannot get back to the $50 level when gold is at $1,800 and both of those things are going to happen.”

When asked about gold shares Boyd remarked, “You look at the valuation, at the multiple to underlying net asset value, they are at the low end of the historical range.  What’s going to happen is that is going to correct itself.  Here we are in the low 1’s (net asset value) for the quality stocks.  I don’t think it’s too far of a stretch to see them back up in the 1.5 to 2 times range as gold moves up from the $1,500 into the $1,800 range.  Gold stocks will outperform the bullion.

From a mining company perspective when we go out and talk to investors, we’re still generally talking to the same people we’ve been talking to for years.  So the vast majority of money is still not here.  Although if you listen to the media you would think everybody was here, the reality is they’re not.”

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