Category: Gold

If the Dow Jones to gold ratio retrace to 1:1, that it has on several events in the past, the gold price could go up to $15,000 to $20,000 an ounce assuming the metal catches up to the Dow, based on Pierre Lassonde, chair emeritus of Franco-Nevada.

Lassonde retired from the board of Franco-Nevada this year, but is still actively active in the mining market. Due to the development of gold prices this season, merged with falling electricity costs, margins in the trade have not been better, he seen.

“As the gold price goes up, that difference [in gold price as well as energy prices] will go directly into the margins and you are discovering margin development. The gold miners haven’t had it so healthy. The margins they’re generating are the fattest, the best, the complete incredible margins they’ve already had,” Lassonde told Kitco News.

Margin expansions and the stock price rally that the mining market has seen the year shouldn’t dissuade new investors by keying in the space, Lassonde said.

“You haven’t skipped the boat at all, even though the gold stocks are up double from the bottom level. At the bottom, 6 months to a year past, the stocks have been very low-cost that no one was serious. It is the same old story in the space of ours. At the bottom of the industry, there’s never sufficient money, and at the top, there is constantly way too much, and we are barely off of the bottom at this stage in time, and there is a great deal to go before we get to the top,” he mentioned.

The VanEck Vectors Gold Miners ETF (GDX) 47 % year to day.

More exploration activity is actually anticipated from junior miners, Lassonde said.

“I would point out that by next summer, I wouldn’t be shocked if we were seeing exploration budgets in place by anywhere from 25 % to thirty % as well as the season after, In my opinion the budgets will be up very likely by fifty % to 75 %. I do believe there’s likely to be a major surge in exploration budgets over the next two years,” he stated.

When the Dow Jones to gold ratio retrace to 1:1, which it’s on a number of occasions in the past, the gold price could ascend to $15,000 to $20,000 an ounce assuming the metal catches up to the Dow, according to Pierre Lassonde, chair emeritus of Franco Nevada.

Lassonde retired from the board of Franco-Nevada this season, but is still actively involved in the mining sector. Due to the expansion of gold prices this year, coupled with falling electric power costs, margins in the industry have never been better, he seen.

“As the gold price goes up, that difference [in gold price and energy prices] will go right into the margins and you are noticing margin development. The gold miners haven’t had it so good. The margins they are producing are the fattest, the best, the absolute unbelievable margins they’ve already had,” Lassonde told Kitco News.

Margin expansions and the stock price rally that the mining industry has noticed the year shouldn’t dissuade brand new investors from typing the area, Lassonde said.

“You have not missed the boat at all, even though the gold stocks are actually up double from the bottom part. At the bottom, six months to a year past, the stocks had been so inexpensive that no one person was interested. It is exactly the same old story in our space. At the bottom level of the market, there’s never sufficient money, and at the top part, there is often way too much, and we are slightly off of the bottom at this stage on time, and there is a great deal to go just before we reach the top,” he stated.

The VanEck Vectors Gold Miners ETF (GDX) forty seven % season to date.

Far more exploration activity is actually predicted from junior miners, Lassonde said.

“I would point out that by following summer, I wouldn’t be surprised if we had been seeing exploration budgets set up by anywhere from 25 % to thirty % and the year after, I believe the budgets will be up much more likely by fifty % to seventy five %. I do believe there’s likely to be a huge surge in exploration budgets over the following two years,” he mentioned.