One after another, commodities from aluminum to natural gas have surged as COVID-19 pandemic aftershocks rattle supply chains. Gold could be next, although for very different reasons.
That is the view of two of the biggest names in Canadian mining — the former chiefs of Goldcorp Inc, David Garofalo and Rob McEwen — who predict that investors will catch on soon that global inflationary pressures are less transitory and more intense than central bankers and consumer price indices suggest.
When that realization sets in, gold’s inflation-protection appeal probably will send prices to US$3,000 an ounce, from about US$1,800 now, according to Garofalo, who ran Goldcorp before it was gobbled up by Newmont Corp and now heads Gold Royalty Corp.
Such a run-up would be a “down payment” to McEwen’s US$5,000 long-term prediction.
It comes as little surprise that gold executives have a bullish bullion outlook.
However, they do not often predict such a steep gain in so short a time. If other metals are any indication, the gold rally, when it comes, will be dramatic, Garofalo said in an interview on Friday alongside McEwen.
“I’m talking about months,” he said. “The reaction tends to be immediate and violent when it does happen. That’s why I’m quite confident that gold will achieve US$3,000 an ounce in months, not years.”
Gold for December delivery on Friday rose US$14.40 to US$1,796.30 an ounce, up 1.6 percent for the week.
The global monetary and debt expansion to cope with the pandemic, as well as secondary drivers associated with supply disruptions, will have people turning back to traditional methods of protecting wealth, said McEwen, the founder and former chairman of Goldcorp who now runs his namesake mining company and is a shareholder in one of the companies Gold Royalty is acquiring.
“It’s not just the dollar,” he said. “All currencies are buying less than what they were buying a year ago. So I look at that as an unprecedented development at least in our lives that is going to affect the value of fiat currencies around the world.”
Its universality and 4,000 year-old history mean gold is better positioned than cryptocurrencies as a hedge against an inflationary environment that “will have deep and meaningful impacts on our capital,” Garofalo said.
Inflation is also rippling through the gold industry, with labor and input scarcities emerging and costs rising.
That creates another incentive for mid-sized producers to seek savings through mergers and acquisitions after years of underinvestment saw reserves shrink, he said.
Additional reporting by AP, with staff writer
The New Taiwan dollar is on the verge of overtaking the yuan as Asia’s best carry-trade target given its lower risk of interest-rate and currency volatility. A strategy of borrowing the New Taiwan dollar to invest in higher-yielding alternatives has generated the second-highest return over the past month among Asian currencies behind the yuan, based on the Sharpe ratio that measures risk-adjusted relative returns. The New Taiwan dollar may soon replace its Chinese peer as the region’s favored carry trade tool, analysts say, citing Beijing’s efforts to support the yuan that can create wild swings in borrowing costs. In contrast,
Nvidia Corp’s demand for advanced packaging from Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) remains strong though the kind of technology it needs is changing, Nvidia CEO Jensen Huang (黃仁勳) said yesterday, after he was asked whether the company was cutting orders. Nvidia’s most advanced artificial intelligence (AI) chip, Blackwell, consists of multiple chips glued together using a complex chip-on-wafer-on-substrate (CoWoS) advanced packaging technology offered by TSMC, Nvidia’s main contract chipmaker. “As we move into Blackwell, we will use largely CoWoS-L. Of course, we’re still manufacturing Hopper, and Hopper will use CowoS-S. We will also transition the CoWoS-S capacity to CoWos-L,” Huang said
VERTICAL INTEGRATION: The US fabless company’s acquisition of the data center manufacturer would not affect market competition, the Fair Trade Commission said The Fair Trade Commission has approved Advanced Micro Devices Inc’s (AMD) bid to fully acquire ZT International Group Inc for US$4.9 billion, saying it would not hamper market competition. As AMD is a fabless company that designs central processing units (CPUs) used in consumer electronics and servers, while ZT is a data center manufacturer, the vertical integration would not affect market competition, the commission said in a statement yesterday. ZT counts hyperscalers such as Microsoft Corp, Amazon.com Inc and Google among its major clients and plays a minor role in deciding the specifications of data centers, given the strong bargaining power of
INDUSTRY LEADER: INDUSTRY LEADER: Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), a major chip supplier to Nvidia Corp and Apple Inc, yesterday said it aims to grow revenue by about 25 percent this year, driven by robust demand for artificial intelligence (AI) chips. That means TSMC would continue to outpace the foundry industry’s 10 percent annual growth this year based on the chipmaker’s estimate. The chipmaker expects revenue from AI-related chips to double this year, extending a three-fold increase last year. The growth would quicken over the next five years at a compound annual growth rate of 45 percent, fueled by strong demand for the high-performance computing
RSS