Rob McEwen's McEwen Mining (the product of the recent US Gold/ Mindera Andes merger) has responded to our friend Eric Sprott's call to mining companies to believe in their own products by saving in bullion rather than dollars by holding 1/3rd of its $79 million treasury in gold and silver bullion.
McEwen, who turned Goldcorp into an amazing success using similar practices, is calling for $200 silver and $5,000 gold by 2015.
As Sprott's plan to hold company assets in bullion rather than cash or treasuries continues to gain momentum, it will be interesting to see whether the producers can eventually withhold sufficient physical silver from the market to wrestle the control of the market from the paper markets that currently wags the dog.
McEwen Mining, the product of the January fusion of US Gold and Minera Andes, said on Thursday its San Jose mine in Argentina produced 1.45-million ounces of silver and 20 934 oz of gold in the fourth quarter.
The TSX- and NYSE-listed firm also said it held around one-third of its $78.8-million treasury in bullion, betting that prices will rise.
CEO Rob McEwen followed a similar practice when he headed up Canada’s Goldcorp, and repeatedly forecast that gold prices would hit $5 000/oz by the middle of the decade, and silver $200/oz.
Last year, Canadian fund manager Eric Sprott called on silver producers to hold some of their treasuries in the metal itself.
McEwen Mining said it expected San Jose, which US-based Hochschild Mining owns 51% of, to produce 5.7-million ounces of silver and 85 000 oz of gold in 2012.
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