According to Charles Cooper of Metals Focus, major gold miners are losing market share to junior and intermediate producers, and the trend doesn’t look likely to stop.
With production growth falling and few new projects in the pipeline, what’s the investment appeal of major gold miners right now?
Charles Cooper, head of mine economics at Metals Focus, addressed that issue at last week’s Denver Gold Forum, commenting, “the question I suppose you would want to ask is, ‘why would I be investing’ or ‘why would I want to look at’ the major mining companies if their production growth is falling … and they’re not returning much money in terms of dividend, or share buybacks to the investor community.”
He continued, “the answer is, well, maybe longer term you look at that as a stability factor — you might want to put your money in long-term stability. But at the moment it’s fairly unattractive.”
According to Cooper, the fall in production growth from large gold miners is the result of a shift in the sector. “Basically what’s happening is you’re seeing [production] growth coming in from the intermediate sector and the junior miners,” he explained.
Moving forward, Metals Focus sees gold production increasing this year and next year, then remaining flat until 2022, with the majors likely trimming down their portfolios in the coming years.
Cooper also touched on where the gold price is headed, noting that although there are “a lot of headwinds at the moment,” Metals Focus sees potential for the yellow metal to “rise a little bit higher over Q4, going into the early part of next year.”
Listen to the interview above for more insight from Cooper on gold.
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in contributed article. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.