The energy crisis continues and global inflation intensifies. Canadian gold producer Agnico-Eagle Mines Ltd. Sean Boyd, chief executive, said recently that the inflation problem was not temporary and that investors could push gold prices to new highs in the next 12 months-breaking last year's all-time high of $2075.47 an ounce to hedge against inflation.
As of press time, spot gold traded around $1795 an ounce.
"inflation is not temporary," Boyd said in a recent interview. He pointed out that the current cost pressure is "more sticky" than it was three months ago, and that inflation will rise further in the future, which is a very favorable environment for gold.
As the epidemic situation has eased this year, gold, as a traditional safe haven asset, has generally performed poorly this year. However, as the economy restarts, the energy crisis intensifies and inflation in major economies continues to rise this year, there is growing concern that the inflation problem will be difficult to ease in a short period of time, which will enhance the attractiveness of gold as a hedge against inflation.
One difference in this inflation is that large companies are talking about passing on increased costs to consumers, which will eventually lead to higher labour costs, Boyd said on Wednesday. The cost pressure on Agnico (due to rising commodity prices and global supply chain problems) has continued unabated since the second quarter, according to results released by Agnico on Wednesday.
However, Boyd said that in the future, the price of high-quality gold stocks, rather than ordinary gold stocks, could hit an all-time high.
Similarly, over the weekend, David Garofaloh and Rob McEwe, the former chief executive of Goldcorp Inc, another Canadian gold company, said investors would soon realize that inflation was not temporary, as central bankers and the CPI index suggested, and that gold prices were likely to rise abruptly.
Garofaloh noted that gold's appeal as a hedge against inflation could push the price of gold from about $1800 an ounce to $3000 in just a few months. "when this does happen, people's reactions tend to be stressful and violent. That's why I'm very confident that gold will reach $3000 an ounce in months rather than years.
Although many gold mining bosses are now optimistic about the future of gold, some market participants are still relatively cautious.
Jeffrey Halley, Asia-Pacific Market analyst at OANDA, said, "although the low level of gold prices continues to rise and looks ready to test $1800 again, it may be difficult to maintain momentum above $1800. When gold rose strongly recently, most of the flow seemed to be dominated by fast money looking for momentum. Unfortunately for gold, the money will run away at the first sign of trouble. "
