Gold To Continue
To Rise On Back Of Failed Government Attempts To Bail Out Economies:
McEwen by Alex Létourneau | 10 December 2012,
(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
“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.