Agnico CEO Warns Gold To Hit $3,000 On Supply Concerns

Sean Boyd, CEO of Agnico Eagle, warns that gold could hit $3,000 an ounce on supply concerns. He also mentions that we are expected to see more stimulus out of several countries as well as an increased demand for the metal, which also has a factor in gold prices.

Eric King
August 29, 2012
King World News

Today one of the top CEO’s in the world told King World News that going forward, “... we will see increasing central bank demand for gold.” He also warned, “We will (also) see reduced supply.” Sean Boyd, who is CEO of $8 billion Agnico Eagle, also discussed why the gold price is set up to frustrate the bears by nearly doubling from current levels.

Here is what Boyd had to say: “We are just looking at further stimulus, this time coming out of China, where they are looking to spend over one trillion dollars on stimulus projects to try to boost the economy. This takes us back to late 2008, when the powers that be were trying to sort out the financial crisis.”

Sean Boyd continues:

“The answer was more stimulus, and at the time gold was $700. Gold went from $700, on the back of that stimulus (in 2008), to $1,900. I think we are about to repeat that same pattern. Here we are, gold is at (roughly) $1,600, and there are a lot of question about the weakness in the global economy.

There are certainly expectations that we are going to see a renewed round of stimulus coming out of Europe and the US....

“We’ve seen the first large stimulus coming out of China. So if we get more stimulus globally, that has the potential to take gold from the $1,600 range, to the $3,000 range, which would be akin to the move from $700 to $1,900.

So that $3,000 an ounce gold number is certainly not out of the question, given the weakness in the overall global economy, and the serious issues around debt which is going to result in more stimulus, and as a result debasement in paper currencies.

When they (central planners) talk a different story between austerity, and stimulus only if needed, I think the reality is stimulus is needed, and we will see stimulus in one form or another coming out of Europe and the Fed. On the back of what we’ve just seen in the last few days coming out of China, it’s all going to be important for the gold price going forward.”

Boyd also added: “Relative to bullion, gold equities are trading at likely their lowest levels (in history). I think that chart (from Caesar Bryan), when I look at it, just screams opportunity.

It’s our theory going forward, that as gold continues to perform, and moves higher through $2,000 (on its way) to $3,000, we’ve got a situation here where the equities can outperform gold during this next run. (Gold) equities will provide the leverage (to gold) that people have been looking for, that wasn’t there in the past few years.

The industry, in terms of market cap, is still extremely small relative to other equity options out there. You get money moving into a relatively small sector, that’s when you can have really sharp moves in equity valuations. So it’s not going to surprise us, as gold moves, to see 10% to 15% daily moves in some of these (gold and silver) equities.”

Boyd also warned of a decrease in the supply of gold: “Not only will we see increasing investment demand, we will (also) see increasing central bank demand for gold. We will (also) see reduced supply because companies are looking for more measured, lower risk growth. So the combination of those two is what is going to help propel the gold price higher.”

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