Gold prices set to shine, experts estimate $3,000 an ounce in months

That’s the view of two of the biggest names in Canadian mining – David Garofalo and Rob McEwen, former heads of Goldcorp Inc. – who predict that investors will soon catch that global inflation pressures are less transient and more intense than central bankers and Consumer Price Index suggests.

When that realization begins, gold’s inflation-protection appeal will probably send prices up to $3,000 an ounce, up from about $1,800 now, according to Garofalo, which was run by Newmont Corp. Gold is the head of Royalty Corp. The run-up would be a “down-payment” to McEwen’s long-term forecast of $5,000.

It should come as no surprise that gold executives have a bullish outlook. But they often don’t predict such huge gains in such a short period of time. If other metals are any indication, gold’s rally, when it arrives, will be dramatic, Garofalo said in an interview with McEwen on Friday.

“I’m talking about months,” he said. “When that happens the reaction becomes immediate and violent. So I’m pretty confident that gold will hit $3,000 an ounce in months, not years.”

Global monetary and credit expansion to tackle the pandemic, as well as secondary drivers associated with supply disruptions, will have to turn to traditional methods of protecting money, said McEwen, founder and former chairman of Goldcorp, which now runs its name mining . Company and is a shareholder in one of the companies that Gold Royalty is acquiring.

“It’s not just dollars,” he said. “All currencies are buying less than they were a year ago. So I see this at least as an unprecedented development in our lives that is going to affect the value of fiat currencies around the world.”

Its universality and 4,000-year history mean that gold is in a better position than cryptocurrencies as a hedge against an inflationary environment that “will have a profound and meaningful impact on our capital,” Garofalo said.

deal incentive

Labor and input shortages are emerging and costs are rising, as well as inflation driving through the gold industry. This creates another incentive for medium-sized producers to seek savings through mergers and acquisitions, as reserves have eroded after years of low investment, he said.

Another segment of the market that is ripe for further consolidation, according to Garofalo, are royalty companies that offer upfront payments in exchange for the right to produce or a percentage of revenue. His company, Gold Royalty, went public earlier this year and announced three acquisitions, including Abitibi Royalty Inc. and Golden Valley Mines & Royalty Ltd.