Bullion’s record-breaking run will attract investors back to gold mining stocks, leading to “explosive” performance in shares of producers of the precious metal, according to Canadian mining industry veteran Rob McEwen.
Gold has climbed more than 25% this year, extending a stellar run in 2024, on the back of central bank buying, Asian investor interest, and growing haven demand. However, shares of gold miners have lagged, with some investors put off by production misses and rising costs, while others have been lured by higher returns in technology stocks and other sectors.
But with fears growing that the US economy will nosedive as President Donald Trump’s trade war intensifies, gold miners could soon catch up as bullion prices keep rallying and other asset classes become less appealing, according to McEwen, who founded Goldcorp and now leads McEwen Mining Inc.
His company — which has seen a 34% drop in its own shares over the past year — runs a handful of small mines and a portfolio of projects that it’s seeking to bring into production. While investors’ aversion to the gold-mining sector has been a headwind to those efforts, McEwen is confident that the industry as a whole is set for a revival.
“You have this cascading effect of gold’s going up, and then there’s interest in the majors, and then it goes down to the mid-tier, and then the juniors and the explorers,” he said in an interview. “When it gets down to that stage, it becomes very explosive in terms of the upward push.”
The mining veteran said bullion is still in the early stages of a bull market and expects gold equities to eventually outperform that of gold in the next two to three years, as the metal surges to $5,000 an ounce.
That’s higher than mainstream gold analysts are forecasting, but many of them have been raising their targets as prices has soared to new all-time highs.
(By Yvonne Yue Li)
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