The head of Newmont Mining told CNBC Monday he sees the price of goldrising to $2,000 an ounce and the time to buy it is now before inflation “comes roaring back.”
At a time when investors want to invest in gold exchange-traded funds rather than the gold miners that pull the metal from the ground, Newmont [NEM 52.62 -0.83 (-1.55%) ] CEO Richard O’Brien said either option is an “opportunity to participate in a bull market.”
But investing in Newmont gets you a dividendpegged to the gold price, and if gold does hit $2,000, as O’Brien predicts, investors would be getting a boost. Last year, when O’Brien predicted gold at $1,750 an ounce in 2012, Newmont’s dividend rose in each quarter and was 35 cents a share in the fourth quarter.
Right now, the company pays a 2.3 percent dividend, he said, but “when we get to $1,700 gold, it will go up to 2.5 percent. When we get to $2,000, we’d be 3.5 percent to 4 percent higher.” He did not say when he expects gold to rise to $2,000 an ounce but did say the company sees flat production and escalating costs this year.
But taking a longer view, he said, “If you think about the next year, the next three years, the next five years we’re in an upwardly sloping gold price environment.”
O’Brien said Federal Reserve Chairman Ben Bernanke’scomments on the economy earlier Monday show currencies are “going to continue to be cheap, and when inflation comes, it’s going to come roaring back and gold will look like an asset class that people should own. Buying it now is the best time to buy it.”