Amid a tempestuous year for the U.S. dollar gold price, gold has quietly moved up about 6% in Canadian dollar terms, squarely placing the focus on gold producers with Canadian operations that generate cash flow, says Ryan Hanley, mining analyst with Mackie Research Capital. In this interview with The Gold Report, Hanley lists his storm-tested top picks, shines light on names with M&A potential, and sees smooth sailing ahead for some companies with near-term catalysts.
The Gold Report: Why haven’t the recent Islamic State attacks in Paris spurred a greater safe-haven gold trade? Does it mean the concept of gold as a safe haven is, for the most part, dead?
Ryan Hanley: I don’t believe so. Despite the recent attacks, this is the first time in a long time we’ve seen the United Kingdom backing France, and the U.S. and Russia on the same page. Gold continues to have an inverse relationship with the U.S. dollar, and with the U.S. posting strong employment numbers, we continue to believe that the focus is still on the U.S. dollar and the implications of a rate hike in December.
TGR: What sort of interest rate hike are you modeling?
RH: Our expectation would be about 25 basis points. We believe about 65–70% of that is already priced into the market.
TGR: Where do you peg the low end of the support range for gold in the near term?
“Klondex Mines Ltd. has a good balance sheet, and management continues to execute at its two high-grade assets.”
RH: With continued economic strength in the U.S., we expect some near-term pressure to remain on the gold price. We could see it briefly dropping below $1,000/ounce ($1,000/oz) in the near term, but in the long term we’re much more bullish, especially given the average …read more