Gold To Continue
To Rise On Back Of Failed Government Attempts To Bail Out Economies:
McEwen by Alex Létourneau | 10 December 2012,
4:10 p.m.
(Kitco News) - According to a mining executive,
gold prices will continue to rise as governments across
the world have been unable to bail out their respective
economies.
Speaking to the AMEX club in Montreal Monday,
chairman and chief executive officer of McEwen Mining Inc.
(TSX, NYSE: MUX) Rob McEwen backed gold’s continual
future ascent due to global government’s debasing
their currencies in a bid to jump start their economies.
“Around the world, governments are
trying to bail out the economies and it’s not working,”
said McEwen. “We’ve had trillions of dollars
pumped into the U.S. and have seen very anemic, weak recoveries
in the economy.
“The gross national debt of the U.S.
running from 2001 to present, and this is just the government
debt, and it is just about $16 trillion,” said McEwen.
“It’s doubled since 2008. During Obama’s
term, he’s created more debt than any president before
him.”
McEwen pointed to recent reports from the
White House that U.S. debt will continue to grow, rather
than shrink.
“The White House in February said
that debt in the U.S. in 2022 will be $26 trillion,”
said McEwen. “Now I’m quite confident in politicians
around the world and their ability to underestimate where
they’re going to be, and it’s not any different
over here.”
While the U.S. has seen their debt grow
exponentially, McEwen says they’re not the only country
that has been trying to get their economies going by such
methods.
“The thing you have to keep in mind
is that it’s not just the U.S. that’s the culprit,
it’s every government around the world that’s
employing the same mechanism to try and kick start their
economies and their debasing their currencies,” said
McEwen.
During his speech, McEwen provided statistics
showing the steep drop in global currencies compared to
gold.
“The way that I think everyone should
look at it is how much the currencies have depreciated against
gold,” said McEwen. “If you look at our Canadian
dollar in the past 11 years it has lost 76% of its value
against gold. The U.S. dollar has lost 85% of its value
in the last 11 years against gold.”
The statistics also showed that the Euro
has dropped 78%, the Chinese Renminbi 80% and the British
Pound 83% as well during that 11 year period.
As McEwen continues to see these trends
from governments across the world, he stands by his gold
price call of $5,000 an ounce gold.
“To me gold is the ultimate currency
because it can’t be created quickly and this is one
of the reasons that the price of gold is going up,”
said McEwen.
McEwen also touched on gold prices and they’re
outperforming senior gold stocks (XAU), which has been confusing
to investors seeing as gold stocks were once higher than
gold but the trend has been reversed, rather than gold stocks
following gold prices higher.
“You had lower gold prices and high
stocks, you would have expected stock prices to follow high
gold prices, but they haven’t,” said McEwen.
“There are a couple of reasons and one I’d like
to put out is a research report put out by CIBC this year
and it looked at the election years from 1984 to 2008, there
were seven of them.
“The XAU would decline in performance
during the election year, and when I think about it, I think
it’s rather intuitive,” McEwen said. “The
incumbent government is going to try to pull out all the
good news they have to get reelected, and there’s
a lot of noise and confusion in the market place due to
the election. In the year following, reality sets in and
promises made cannot be delivered right away.”
What it leads to, McEwen said, is that the
XAU has a historical bounce back period in the year following
the election.