Episode Details

Gold should head higher due to debts and deficits, said Peter Grosskopf, chairman of SCP Resource Finance. 

On Wednesday Grosskopf was interviewed by Kitco Mining. 

Gold has been hitting fresh all-time highs late into 2023 and through 2024, but gold miners have only just rallied in the last month. Gold equities, measured by the GDX, is up over 16% in the past month.

"The market finally woken up to these high precious metal prices," said Grosskopf. "[The rally is] definitely led by the big caps. The small caps just started to react in the last day or two after coming out of a long, cold stretch."

Grosskopf said that gold miners could have been held back by costs, which were crimping margins. 

"Miners have put up with some difficult operating conditions from an inflation perspective," said Grosskopf. "Projects are taking longer, they're more expensive to build, and it took a while for both
companies and their shareholders to digest what margins would be in this kind of environment."

Grosskopf said that the main driver for gold prices will be debt concerns. 

"There's just too much debt in the world," said Grosskopf. "Governments have built up these deficits and debt [levels] to the point where they actually do matter."

Grosskopf said that markets have been calm and complacent regarding the debt. 

"But the sheer size of the U.S. fiscal deficit and whether or not they have control over that is starting to trouble investors,” he said. “[You] have two choices to get out of this debt predicament: one of them is to
deflate and face a financial crisis, which I don't think anybody expects. The other is to inflate.” 

"Gold holds its own...even in an environment of rising rates...in a world where deficits and debts are just too big," Grosskopf said.  


0:00 - Gold equities jump
0:45 - Margin compression on cost inflation
2:15 - M&A
3:18 - Junior resource recovery
4:12 - Critical minerals that work
4:40 - It's expensive to build a copper project
5:50 - Can miners charge a green premium? 
7:35 - Why gold will head higher

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