Monday, November 29, 2010

Sean Boyd Gold to $2000 Silver to $75 in 12 months

With gold trading near $1,370 and silver breaking back above $27, King World News interviewed Sean Boyd, Chairman and CEO of Agnico Eagle to get his thoughts on where gold and silver are headed. When asked about gold specifically Sean stated, “I think having that perspective of being around the industry for a long time, if you go back ten years ago and someone had said gold was going to $2,000 then you would have thought well, if that’s the case then the world is going to be in a total mess. Well, we can see gold at $2,000 without the world being in a total mess. So I think this argument that we have to have disaster before gold is going to go up is wrong.”

Sean Boyd continues:

“We get caught up in these short-term fluctuations, and we tend to lose track of the big picture. I was just reading our 1999 annual report where we were making the case for gold when everyone had written it off and people were calling it the barbarous relic. So I just think we are gradually moving away from the concept that it was worthless, to people all of the sudden coming to the conclusion that it has a role. That is just starting in my view.

In the short-term gold has acted reasonably well. In the the next 6 months we should push our way up to $1,500, and gold will likely go through $1,500. But this is just an ongoing trend as we move higher and people start to realize the importance of gold as a currency.

We are seeing some US dollar strength on the back of some euro weakness based on the sovereign debt issues, and when you come full circle this is good for gold.

I can see us gradually moving in the next 12 to 18 months up into the high teens and gold will probably test $2,000 at some point. We want gold to go up gradually, we don’t want it to be in the headlines every day. Pullbacks are always good in the longer-term trend. So I can see if we look out into 2012, gold in that $2,000 range.”

Regarding silver Sean stated, “Silver on a percentage basis is going to do better than gold over the next year or two. Gold will attract money into the precious metals space and silver will be a big beneficiary of that. And if gold is at $2,000, then silver could be $60 to $75.”

When asked about consolidation in the mining sector Boyd responded, “Consolidation will continue because there is a lack of growth in certain quarters, and it gets to the point in some instances where it’s cheaper to buy than to hope that exploration is going to solve your growth challenges. So there will be more consolidation but I think it is going to be selective.

I am not sure of the exact number, but let’s say there are only 20 companies that can actually build mines in the industry. That means there are only 20 potential buyers, and there’s maybe thousands of potential projects out there, so there is a limit to what can get done.

So you have to be in stories with good solid deposits, good management and I think you will be ok there because eventually they will get taken out in this environment.”

Sean Boyd is one of the true veterans of the mining industry, and he has helped Agnico Eagle to achieve a $13 billion market cap. As Sean says, higher prices are on the way as well as more consolidation in the gold and silver space.

Eric King

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