A Wall Street Transcript Interview with David Haughton, Co-Head of Mining Research for the BMO Metals & Mining Coverage Team: US Dollar Appreciation Means Continued Gold Price Depreciation

Wall Street Transcript

67 WALL STREET, New York - December 30, 2013 - The Wall Street Transcript has just published its Gold and Precious Metals Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

Topics covered: Precious Metals - Lower Gold Price Environment - Precious Metals Exploration and Production - Increasing Capital Expenditures - Emerging Markets Silver Consumption - Mining Safety and Environmental Concerns - Gold Production Cost Structures - Gold Price Stabilization

Companies include: Barrick Gold Corporation (ABX), Newmont Mining Corp. (NEM), Goldcorp Inc. (GG), Agnico-Eagle Mines Ltd. (AEM), Yamana Gold, Inc. (AUY), Eldorado Gold Corp. (EGO)

In the following excerpt from the Gold and Precious Metals Report, an expert mining analyst discusses the outlook for the sector for investors:

TWST: It looks like the gold price has been kind of reasonably stagnant over the past years. So what's going on?

Mr. Haughton: I wouldn't call that stagnant. I would call it a fairly steep decline, particularly during the course of this year, when a number of events impacted the market. Among the factors that we look at are the relation to U.S. dollar strength against a trade-weighted index, and there has been some strengthening of the U.S. dollar. We've also had a look at real interest rates. They've gone from negative, which is very supportive of gold, into positive, which is less constructive for gold. Another factor weighing on the gold price over the last six months has been anticipation around an end to QE in the so-called tapering.

TWST: And that's a negative as well.

Mr. Haughton: That's created a reasonable amount of headwind. In addition to that, we've seen ETF disinvestment even though that has been offset by investment in physical gold in Asia, India and China in particular. We've also had a rotation on the basis of risks. So to the extent that the U.S. stock market is doing really well, gold is seen as an opportunity cost and that's exacerbated by the real interest rates turning positive, making the reason for holding gold as a safe-haven at the moment less compelling for a number of investors.

TWST: Where do we go from here?

Mr. Haughton: Well, some may say that the QE tapering is already priced into gold, but we saw just last week when there was the slightest hint that the Fed might open the door for tapering to start as early as December, that the gold price took a drop in the order of $20 to $25 per ounce over a couple of days. It may be priced in a bit, but I think that once tapering comes through we'll see further headwinds for the U.S. dollar gold price...

For more of this interview and many others visit the Wall Street Transcript - a unique service for investors and industry researchers - providing fresh commentary and insight through verbatim interviews with CEOs, portfolio managers and research analysts. This special issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.

View Comments