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Gold prices will continue to see new highs: expert

Yahoo Finance’s Alexis Christoforous and Brian Sozzi how the U.S. stimulus deal will impact the price of precious metals with Grant Bear Resources Director and President of Minera Alamos, Doug Ramshaw.

Video Transcript

DOUG RAMSHAW: Well, I think we've seen increased volatility after a very strong and pretty steady rise early this year. Since August we've seen gold whipsawed, as we've seen varying degrees of whether stimulus is coming, whether it isn't. And I expect that to continue over the coming weeks as we head up to election day.

BRIAN SOZZI: Doug, do you have a year end price target for gold?

DOUG RAMSHAW: Well, I think we'll continue to see new highs. I think even if we don't see a decision on a new stimulus package pre-election, I think there's a certain inevitability that there'll have to be more moves, and I think that will drive gold still further. When we did break 2,000 earlier this year, it did so pretty aggressively. And I think what we've seen subsequently, is a little bit of profit taking. But the overall outlook for gold still looks very positive for the end of this year and into next.

ALEXIS CHRISTOFOROUS: Talk to us about mining companies and the impact this pandemic has had on them, and also on their bottom lines, and their ability to do their job.

DOUG RAMSHAW: Yeah, we saw a lot of mine closures or suspensions earlier this year as a response by various governments to the COVID outbreak. But overall, these higher gold prices have led to a very strong balance sheets I think from the majors. They're in a very good position to take advantage of these high gold prices. We're seeing companies that haven't paid dividends in five, six years re-institute the dividend policies.

And I think rather than mergers and acquisitions, which has been typically a move by the majors, we've seen a strengthening of the balance sheet this year. And I think that will probably lead to more corporate actions next year. We are dealing with a declining, probably peak gold production has taken place, and now we've got companies that, you know, it's a declining resource based [? of ?] mining every year. So they've got a very strong balance sheet to effect corporate actions in this space.

BRIAN SOZZI: Doug, I've seen one estimate out there recently from a reputable Wall Street firm that gold prices might hit $10,000 over the next decade. If an investor were to believe a call like that, how should they position for that right now?

DOUG RAMSHAW: Yeah, I hope that we don't see those kind of prices, because I think that it will ultimately mean that the world is a lot more messed up than perhaps we're already dealing with right now. The reality is, anything over even the prices we're at now are very healthy, provide very healthy margins for gold companies. In terms of positioning, we've seen big push both in gold ETFs and physical buying from the US Mint increasing, even before COVID, back summer of 2019.

But ultimately, I'm a big believer, as someone building a gold mine right now, that probably the best way to play the gold prices is companies that are actually producing gold or companies such as Great Bear, I'm the director of, that are looking like they've made one of the largest new gold discoveries in recent years. So I think a combination of all of that. But the early money has been moving into the big gold producers, and I think there'll be a tickle down effect from them, at least in the gold equity side of things.

JARED BLIKRE: Jared Blikre here. Just want to ask you about the central banks of the world kind of de-dollarizing, buying gold. That's a trend we've seen for the last few years. Russian and China mainly. Is this a trend that you've seen continuing throughout the pandemic? You see it continuing into the future?

DOUG RAMSHAW: Yeah, Jared. I think we've been so inundated obviously, with the tragic headlines with regard to COVID over the last seven, eight months, that we forget that there were really strong tailwinds that led into this market. I think what the; pandemic has done, has accelerated and amplified issues that were already in the system. And you saw central banks making moves well in advance of COVID. I think that will continue I think against a backdrop of currency debasement and the threat of inflation. I think we'll continue to see that action moving forward.