Rob McEwen: “We Are At Or Very Near The Bottom In Gold, Definitely For Gold Shares”

I had the opportunity yesterday to join McEwen Mining‘s Q1 2013 conference call, led by legendary founder and former CEO of GoldCorp, Rob McEwen. He is now the CEO, Chairman, and largest shareholder of McEwen Mining.
It was an interesting call, with over 30 minutes dedicated to listener Q&A. In response to some very intelligent questions, Rob shared some very interesting market comments in return.
Here are the highlights:
With regard to the tightening interest-rate “noose” choking fixed-income dependants, Rob said, “We’re in a situation where governments have dropped interest rates to a point that it’s hurting so many people—the retired, those on pensions, those on retirement fixed income. It’s forcing people into riskier and riskier investments and the price is large that will have to be paid.” (Editor’s note: what that “price” is, he didn’t say)
When asked if currently buying new positions in gold bullion and mining shares at these levels, Rob replied by saying, “Not bullion. I think the shares are heavily discounted right now, and represent very interesting opportunities. We see both good and bad situations discounted in equal amount, and I don’t believe we’ve seen buying opportunities like this since 1999 and 2001. I have done some buying…[and] I do believe we are at or very near the bottom for gold, and definitely for gold shares, and prices are going to improve.”
Speaking to the expectation of a recovery in mining shares this year, Rob noted that, “Gold shares I think are overdue for a big move up by the end of the year, and there is a phenomena I’ll call the “White House Affect.” If you go back to the presidential election in 1984 and look at the eight elections…up to 2012, in the year of every election, gold shares have fallen in value, and the year that follows the election…the gold shares have risen. If you use the XAU as a measure of gold shares, they’ve risen between 10% and 80% in the years that have followed a presidential election in 7 out of those 8 periods. In the one year that they went down [it] was during the Bre-X scandal, as it pulled the whole sector down. But based on that 7 out of 8 year increase, there’s a high probability that at the end of this year, gold shares are going to be higher.”
Concluding on the value-driver to push the mining industry forward, Rob said, ”In my experience it’s discoveries that create value and will pull the sector along, and that’s why we invest a lot of money in exploration, and we’ve met with some success.”
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Bottom Line: This was an interesting call with one of the great mine developers of our time. It is recommended listening for precious metals investors and those looking to add to their education in the space.
To listen to Rob McEwen’s Q1 2013 comments, visit: McEwenMining.com
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