The Mining Report: Gold rose 2.5% Jan. 15, and is up 8.4% for the year already. What do you make of that?
Joe Reagor: I think there’s a lot of money flowing into the sector. It’s been two rough years in a row for gold, but now there’s a feeling that a solid floor has been established in the $1,175–1,200 per ounce ($1,175–1,200/oz) range.
TMR: Marc Faber says investor confidence in central banks is collapsing, and gold could rise 30% in 2015 as a result. What do you think?
JR: Investor confidence in the large banks and the world economy has been reduced. Gold should have a steady increase throughout the year, but just one or two examples of positive economic data could result in a loss of some of the upside we’ve seen so far this year. Our 2015 forecast for gold is an average of $1,263/oz.
“PolyMet Mining Corp.’s NorthMet is my favorite polymetallic project.“
TMR: The gold-silver price ratio has risen to 75. Does this surprise you?
JR: We’ve believed since 2012 that gold would outperform silver. Looking at the new projects being built around the world, we’ve seen silver projects at 80–100 grams per ton (80–100 g/t) and gold projects at 0.09–1.1 g/t. So after we applied our recovery rate, this suggested a higher gold-silver ratio on a rarity basis.
TMR: Will the gold-silver ratio decline in 2015?
JR: Silver should outperform gold this year because silver has industrial uses. So the ratio should approach 70, for a silver price of about $18/oz.
TMR: A number of experts interviewed recently by The Gold Report have said that at $16/oz the prospects for pure silver producers are poor. Do you agree?
JR: At that price, the pure silver producers would struggle. However, silver has risen to almost $18/oz, and …read more