No euphoria yet - Denver Gold Group's Tim Wood on why the miners hold back while gold surges

Despite gold's record highs, the miners aren’t celebrating yet, said Tim Wood, executive director of the Denver Gold Group. 

Last week Wood spoke to Kitco Mining at the Gold Forum Americas/XPL-DEV 2024 in Colorado.

Despite gold hitting several all-time highs in 2024, Wood noted that the miners are still wary. While gold prices have surged to $2,600 per ounce, the enthusiasm seen in previous cycles has yet to materialize, with skepticism still prevalent among investors.

"I don't think we're at that belief stage," said Wood. "We've heard quite a few keynote speakers saying it's very clear that we are nowhere near even the onset of a euphoria stage. There's still a lot of skepticism."

Wood highlighted that, despite the high gold prices, attendance at the Gold Forum has decreased compared to its peak in 2018. The drop is due to broader uncertainties in the commodities markets. However, reduced interest rates in the U.S. usually boost metal prices, noted Wood.

Wood also discussed how falling fuel prices and reduced costs for chemical reagents used in mining could expand margins for gold producers in the coming quarters. This could lead to even stronger financial results for gold companies, many of which have already seen significant stock price increases this year. However, Wood believes that more investors will turn to gold stocks once they see consistent, strong quarterly results.

In terms of M&A, Wood predicted continued activity, especially among majors looking to maintain production levels. He suggested that the industry may see a "mega deal" in the near future, potentially creating a $100 billion gold company. Additionally, intermediate companies and single-asset producers may also face consolidation pressures.

Wood noted that while technology, including AI, is playing a larger role in the exploration and mining sectors, human expertise, particularly from skilled geologists, remains irreplaceable. He expressed skepticism about AI's ability to fully take over certain aspects of the mining process.

Looking ahead, Wood expects the rest of the year to be positive for gold producers, with higher metal prices, increased dividends, and strong financial results likely to attract more generalist investors to the sector.

Coverage of the Gold Forum Americas/XPL-DEV 2024 is sponsored by Metalla Royalty.

Disclaimer: The views expressed in this podcast 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 podcast do not accept culpability for losses and/ or damages arising from the use of this publication.