McEwen Confident of Market Turn

 | Apr 22, 2013 | 2:28 PM EDT  | Comments
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I mentioned last week that I was going to be meeting with McEwen Mining's (MUX) CEO Rob McEwen for a sit down. I did at the end of last week.

I'm working on writing up some of my notes from that meeting, which I will publish in the future.

But as some readers here asked me how it went, I thought I'd share some high-level comments today.

As you might expect, Rob's well aware of the dislocation in the gold market that's going on right now. MUX's stock is down 46% in the last year and below $2 now from near $5 last October. But this is a man who started Goldcorp (GG) from scratch back in the late 80s. He's seen this market through many peaks and valleys and is philosophical. He knows it will come back.

His confidence in gold is unshaken by these recent weeks in the gold market. The way McEwen sees it, nothing has changed with respect to the strong likelihood that central banks around the world will continue to have to debase their currencies over the coming years. 

Cyprus was a new moment of the risks we might continue to see around the world, where it is acceptable for banks to seize our private assets. Yet that uproar was quickly quelled and now has been taken off the front pages of business news sections. But nothing has changed according to McEwen.

From McEwen's point of view, eventually the world will come back to this point of view and when they do they will flood into gold. The excessive fear that now characterizes the gold market will quickly turn into excessive greed.

What's more, from his view the gold miners that have been punished harshly these last few months will be rewarded in the other direction as people pile in.

McEwen also made an interesting point to me that since the '08 crash a wide swath of people had been introduced to gold for the first time in their investing lives. This has partly been reflected in the tremendous growth of the SPDR Gold Shares (GLD) over this time. He said he strongly believes that many of these newbie investors -- now with a few years of gold investing experience under their belts -- are going to increasingly start to look at individual miners in the coming year.  He hopes MUX is a beneficiary of that shift.

For a number of years, McEwen has made it no secret that he wants to see the company become part of the S&P 500 in the coming years. He feels that, if that happens, a whole new class of investors will come into the stock for the first time as well.

In the meantime, MUX has no debt and doesn't have to step on the gas in developing some of their bigger projects like in Argentina. But MUX still will explore. This was a big reason why Goldcorp was able to grow in the 90s, even when the price of gold was relatively flat.

McEwen continues to wait for the market to turn.

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