‘They’re nervous about the US dollar’ - interest in gold needs to spread beyond central banks

The disconnect between gold prices and gold equities are explained by central bank precious metal purchases, said Wheaton Precious Metals CEO Randy Smallwood. On Friday, Smallwood spoke to Kitco Mining. Wheaton Precious Metals is a precious metals streaming company headquartered in Vancouver, B.C. Last week the company released its 4Q and year-end. Gold equivalent ounces produced was 619,608 ounces, nearly the same as the year prior. Gold production was up, but silver fell. Silver was down due to a labour strike at Peñasquito. The company set 2024 guidance between 550,000 to 620,000 gold equivalent ounces. The company is targeting over 800,000 by 2028. Operating cash flow in the fourth quarter of 2023 amounted to $242 million, with the $70 million increase due primarily to the higher gross margin.Smallwood noted the disconnect between gold prices and gold equities. The metal has hit several all-time highs in 2024, while the miners are down year-to-date. The VanEck Gold Miners ETF has fallen 1% year-to-date, and the metal is near the middle of its 52-week range. “Gold prices are up because central banks are buying,” said Smallwood. “They're nervous about the U.S. dollar, so the challenge is: ‘How are we going to expand beyond that.’”Last month the WGC published its 2023 fourth quarter and full-year gold demand trends report, saying that annual gold demand, excluding over-the-counter markets, totaled 4,448 tonnes, a 5% drop below robust demand reported in 2022; however, when including OTC markets and stock flows total gold demand rose to a record 4,899 tonnes last year. Smallwood noted the closure of First Quantum’s Cobre Panama mine, one of the world’s top copper mines. It puts the emphasis on social license to operate. Copper is going to be an essential metal for energy transition.  “It’s a shame that happened,” said Smallwood. “It's not good for the industry as a whole. It's not good to have this: ‘No copper in my backyard approach.’ That's not healthy for society.”Disclaimer: The views expressed in this podcast are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this podcast do not accept culpability for losses and/ or damages arising from the use of this publication.