Rob McEwen, chairman and chief owner of McEwen Mining (TSX: MUX; NYSE: MUX), looks back on the year that was, and ahead to what the next year may hold in store for gold.
The Northern Miner: It’s been one of the toughest years on record for commodities and we thought we’d ask you to reflect on the past year and offer your views on what the mining industry might expect in 2017.
Rob McEwen: 2016 was a surprise in many ways — pleasant in the beginning and perplexing as we approach the year end. Right now the election of Trump and Republican control of the Senate and Congress has introduced a brand new variable that I know most investors never contemplated. I’ve been really impressed by how President-elect Trump plans to change their economy to make it stronger by simplifying regulations, lowering taxes, speeding up the pace of approval of capital investments, incentives for repatriating the offshore profits of U.S. multinationals, and then putting in a very seasoned group of executives into his Cabinet. It is showing real serious intent and talent to kick-start the economy. Given this scenario, it is easy to understand why there is a rush of money into the U.S. dollar and particularly into its equity markets. With large planned expenditures on defence, on infrastructure, and a made-in-the-USA policy procurement policy, I expect their labour market will tighten, prices of goods and services will start to increase, and cost push inflation will appear later in the year.
Since the election, the Dollar has climbed in value against many of the currencies of its trading partners, interest rates are trending higher, money is moving out of the bond markets and into U.S. equity markets. I believe these abrupt changes in asset values will be a problem for the derivative market and for borrowers of U.S. denominated debt. Furthermore, I expect the damage caused by these big swings is going to surface next year and reinforce the reasons for investors to have a gold investment.
TNM: So where do we go from here? …
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