Beaver Creek: Mining tycoons ponder gold’s role in looming financial ‘reset’

Mining magnates Frank Giustra and Rob McEwen had a friendly audience yesterday at the Precious Metals Summit in Beaver Creek, Colo., as they outlined the key role they expect gold to play in a coming global financial reset.

In a panel moderated by Anthony Vaccaro, president of The Northern Miner Group, Giustra and McEwen presented a bleak picture of the current economic landscape, and suggested there will be big economic ramifications from the potential end of a 70-year super debt cycle.

“Never listen to what a central bank has to say — watch what they do,” Guistra said. “Right now, they’re screaming, buy gold. They’re loading up. And it is my belief they’re loading up because there will be a monetary system reset that we don’t know what it looks like yet. But gold will play a role, otherwise they wouldn’t be loading up this way,” he told the session.

While younger investors have been seduced by cryptocurrencies and other non-traditional assets, Giustra, CEO of Fiore Group, labelled crypto as a speculative investment that lacks transparency and is prone to market manipulation.

In contrast, he emphasized gold as a viable investment avenue for younger generations, suggesting buying physical gold coins as a stable and relatively safe investment route.

He also shared a personal narrative about his father losing everything to hyperinflation in Argentina, cautioning that similar scenes might unfold in other countries if the domestic population loses faith in their respective currencies.

“You look in Argentina, which experienced 100% inflation a year, gold has gone up tenfold in the last three years in peso terms,” he noted, underscoring the historical reliability of gold as an investment during economic instability.

In another session at the event, Giustra explained how he’s investing money into exploration for the first time.

‘Faustian bargains’

McEwen highlighted that despite the perceived withdrawal of investors from the mining sector, substantial capital is available, potentially from unconventional sources. He cited the example of Saudi Arabia, which has invited the mining industry with open doors and offering a rich repository of geological data and financial resources.

His venture McEwen Copper, a subsidiary of McEwen Mining (TSX: MUX; NYSE: MUX), in the past 18 months raised US$267 million for the Los Azules project in Argentina without going through the usual channels.

However, McEwen criticized the role of royalty and streaming firms, which he perceives as having taken advantage of mining companies, eroding their profit margins and stunting growth opportunities. He likened their influence to sirens drawing sailors to their doom on the rocks, insinuating a cautionary tale for those in the mining industry.

“There are a lot of mining companies that have made Faustian bargains, and the devils have been that smiling royalty or streaming company with the dollars in hand, and you can see the damage they’ve done to our market,” McEwen said.

An interesting development was the announcement by Giustra of a first-ever initiative by to launch a royalty company controlled by Indigenous people in Canada. This endeavour seeks to consolidate and manage the royalties obtained from benefit agreements, aiming to transform the dynamics of the industry.

Shifting geopolitical landscape

The discussion also touched upon a global shift towards more populist governments and a retrenchment from the open-world philosophy that has dominated in recent decades. This trend signals a potential change in economic landscapes globally, possibly leaning towards more localized economies.

“I don’t think we’re going to a more open world; we’re going to a more closed world,” Giustra said.

The Precious Metals Summit continues Sept. 12-15 this week.