Gold Still 'Fantastic' As All Currencies Are Losing To U.S. Dollar - America Silver
(Kitco News)- Although the gold market hasstruggled to attract fresh investment capital, one mining CEO said that themarket has held up exceptionally well, given the headwinds the precious metalsface.
In a recent interview with KitcoNews, Americas Silver Corp.(NYSE: USAS) CEO Darren Blasutti said that gold faces toughcompetition as the U.S. dollar benefits from a growing economy that is seeingrecord low unemployment, as well as businesses profiting from historic taxcuts.
“Nobody is doing well against theU.S. dollar this year,” he said. “You have all these factors driving the U.S.dollar higher, but gold is still holding in there. I think gold is doingfantastic.”
As gold fights to find momentum,Blasutti added that it is not surprising that silver has also suffered.Although silver remains range-bound below critical resistance at $17 an ounce,the market has held up reasonably well as gold comes off a five-month lowhovering around $1,300 an ounce. July silver futures last traded at $16.42 anounce, down 0.76% on the day.
“The problem with silver is thatit doesn’t know where to go when it has no direction from gold,” he said.
However, Blasutti added that heis confident that it is only a matter of time before interest comes back intothe precious metals and when it does, he expects silver to outperform theyellow metal.
Even as interest in the miningsector dwindles as prices of precious metals struggle, Blasutti said that thereare still things companies can do to create value for shareholders. He addedthat value creation is the most significant factor that will bring investorsback to the beleaguered marketplace.
While Americas Silver isprimarily a silver producer, Blasutti said that his company’s deposits alsohave a high concentration of base metals. The company continues to produce morezinc and lead than silver, and those base metals are just off a 10-year high.
For the year, the company isplanning to increase its silver-equivalent production 64% while its pure silverproduction remains flat. Blasutti added that the company is holding on to itssilver reserves until prices move higher.
“This focus is fueling lowercosts, profits and free cash flow,” he said. “We have all these high-gradesilver resources, but at $16 an ounce, they don’t make enough money to bebrought into production. If we can’t make an $8 to $10 profit in silver, whyshould we produce it?”
Looking at zinc and lead prices,Blasutti said that as some material has come into the market, dragging pricesfrom their 10-year highs, he remains bullish on the market. He added that thesupply-and-demand fundamentals in the marketplace haven’t changed and shouldcontinue to support the metals’ uptrend.
“Our view is that zinc is goingto be above $1.40 for the next few years,” he said.
Blasutti’s comments come afterthe company’s first-quarter earnings report released at the start of the month.In the first three months of the year, the company reported net earnings of$500,000 or 1 cent per share, up from a $200,000 net loss reported in the firstquarter of 2017. The company saw modest earnings in the first quarter as thecompany spent $1.8 million on an exploration program.
The company reported productionof 1.6 million silver equivalent ounces, an increase of 46% from the firstquarter of the previous year.
By Neils ChristensenFor Kitco News
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nchristensen@kitco.comwww.kitco.com Disclaimer: The views expressed in this article 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 article do not accept culpability for losses and/ or damages arising from the use of this publication.