Mining Company CEO: Gold is on a strong upward trend, and high prices will continue

After experiencing significant strength last year, the buying behind gold and silver is no longer driven by a single source of funds, but rather by a combination of multiple macro and industrial forces, making a reversal difficult in the short term. High price levels for precious metals may continue and further transmit to mining mergers and acquisitions, with related stocks potentially having room for catch-up.

On February 3rd, Coeur Mining CEO Mitchell Krebs stated in an interview with Bloomberg that the rise in gold is driven by "all factors working together," including the depreciation of the dollar, central banks diversifying their allocations, and expectations of future interest rate declines, debt and deficit pressures, and geopolitical uncertainties.

In addition to sharing the aforementioned macro factors, silver also benefits from strong industrial demand.

At the industrial level, Mitchell Krebs believes that the high-price environment will drive more mergers and acquisitions and capital flow back into mining stocks. Coeur received shareholder approval last week to acquire New Gold, positioning the company as a "North American precious metals mining platform" after previously completing the acquisition of Silvercrest.

He stated that as the market gradually recognizes the sustainability of current price levels, trading activity and demand for allocation to mining stocks are expected to heat up, while the response of mining stocks to the rise in gold and silver has been insufficient.

Core Drivers of Gold: Central Bank Diversification and Interest Rate Expectations Resonance

Mitchell Krebs attributed the upward drive of gold to multiple "tailwinds blowing simultaneously." Among them, the diversification of reserves away from assets like U.S. Treasury bonds by central banks is seen as one of the important forces supporting gold over the past few years.

He also mentioned that the market's expectation of lower future interest rates, combined with debt and deficit issues and geopolitical instability, forms the macro foundation for gold demand, making it more like a sustained asset reallocation rather than a short-term emotional trade.

Silver as a More "Industrial Metal": Electrification Demand and Supply-Demand Gap Amplifying Volatility

Compared to gold, Mitchell Krebs emphasized that the difference with silver lies in its heavier industrial demand weight. He cited examples from solar panels at the power generation end to "anything with a switch" in distribution and end applications, including circuits, semiconductors, as well as electric vehicles, robotics, and data centers, all benefiting from the increased usage brought about by the electrification wave.

On the supply side, he stated that silver has experienced a supply-demand gap for five consecutive years. Due to the smaller market size of silver compared to gold, he believes that in this supply-demand context, it is easier to accumulate speculative forces, thereby amplifying price volatility.

New Demand Variable: Tether and "Central Bank-like" Buying Narrative

When discussing changes in demand structure, Mitchell Krebs mentioned Bloomberg's report on Tether, calling it "surprising," and stated that the company has quietly accumulated a large gold reserve, comparable in scale to some of the world's largest central banks.

He also pointed out that the trend of central banks buying gold has continued for four years and accelerated after Russia's invasion of Ukraine in 2022, with the motivation being to diversify dependence on the dollar more quickly. He believes this theme has not only not weakened but has actually strengthened, with no signs of change in the short term

Mining Company Strategy: Coeur Bets on North American Assets and "Low-Risk Exposure"

Against the backdrop of rising gold and silver prices, Mitchell Krebs shifts the industry's focus to how mining companies can convert price dividends into cash flow and scale advantages. He stated that Coeur is reinvesting internally through exploration and expansion while continuously advancing mergers and acquisitions, having completed the Silvercrest transaction last year, and shareholders recently approved the acquisition of New Gold.

He mentioned that the post-merger Coeur will form a "North American mining platform," with its business footprint focused on Canada, the United States, and Mexico. As investors seek exposure to precious metals, they place greater emphasis on jurisdiction and risk controllability, and the company hopes to attract more equity funding with "low-risk exposure."

Mergers and Acquisitions and Valuation: Expectations of Price Sustainability May Drive Mining Stocks to Catch Up

Mitchell Krebs anticipates that as companies and investors gain confidence in the sustainability of current price levels, more merger and acquisition transactions will occur. He noted that new transaction announcements had already emerged in the industry that day and believes such activities are likely to continue.

In the secondary market, he assesses that the upward movement of gold and silver prices has not yet been fully reflected in mining stocks. As the industry begins to disclose fourth-quarter financial reports from last year in the coming weeks, and with potentially stronger cash flow performance in subsequent quarters, there is a potential catalyst for mining stocks to undergo repricing