NEW YORK (Reuters) - Gold prices could trade above $2,000 per ounce in 2010, possibly reaching $5,000, Robert McEwen, chairman and chief executive of Canada-based U.S. Gold Corp. UXG.A UXG.TO, said on Tuesday.
“I expect it to test $850 by the end of 2008, and by the end of 2010, north of $2,000, possibly $5,000,” McEwen told Reuters in an interview.
That price is well above the current spot gold price of $669 per ounce. Gold prices have been rising toward the May 2006 peak of $714 in recent weeks, but have failed to break above the $700 mark this year after the sharp run-up in prices last year.
McEwen, who formerly served as chairman of Goldcorp Inc. G.TO, said although demand from jewelry makers would likely drop off as gold prices rise, buying by investors who are seeking a liquid investment would be the driving force.
That expected investment demand, coupled with rising costs to mine gold and political risk around the globe, should tighten the supply and demand picture for the precious metal.
Among the risks to production are the likelihood that governments will seek to increase taxes on mining operations as prices surge, similar to the measures some nations have instituted on their oil and natural gas concessions, he said.
“You’re going to have excess profit taxes coming out of the woodwork,” he said.
McEwen’s U.S. Gold Corp. is currently operating five drilling rigs on land adjacent to Newmont Mining Corp’s (NEM.N) sites in Nevada. The company expects to spend about $50 million to develop the site over the coming years.