June 5, 2017 / 12:13 PM / in 3 years

Abitibi Royalties sees gold rangebound, upper limit of $1,425

LONDON (Reuters) - The gold price XAU= is likely to stay range-bound over the next year, with an upper price of around $1,425, barring any major financial shock, the head of Canadian gold company Abitibi Royalties (RZZ.V) said.

FILE PHOTO - Gold bullion is displayed at Hatton Garden Metals precious metal dealers in London, Britain July 21, 2015. REUTERS/Neil Hall/File Photo

CEO Ian Ball’s view sets him at odds with his mentor and renowned gold bull Rob McEwen, of McEwen Mining (MUX.TO), for whom Ball worked for a decade.

The gold price XAU= was trading around $1,280 an ounce on Monday after reaching a six-month high following disappointing U.S. jobs data on Friday.

“I’m not a bull. That’s where Rob and I differ,” Ball told Reuters in an interview.

He predicted U.S. President Donald Trump’s policies would keep the dollar strong “as long as he doesn’t get impeached”.

“The gold price will perform well in currencies that are not U.S. In U.S. dollars, it’s going to trade in a range, with a high of $1,425 over the next 10 to 12 months,” Ball said. “I hope we don’t see as low as $1,000.”

To climb above that range, the world would “need a shoe to drop in the financial system”.

The U.S. Justice Department named former FBI chief Robert Mueller last month as special counsel to investigate alleged Russian interference in the 2016 U.S. election and possible collusion between Trump’s campaign and Moscow.

The Republican president has described calls by some on the left for his impeachment as “ridiculous” and said he had done nothing to warrant criminal charges.

McEwen has said gold at $5,000 an ounce was possible over the next four years, driven by increased demand for gold as a substitute for cash.

The stated aim of Abitibi Royalties, listed in 2011, is to capture the upside potential of various stages of mining, while reducing the risks.

Its flagship royalty - or right to receive a percentage of output - is a 3 percent net smelter return royalty at Malartic, one of Canada’s largest gold mines.

Ball’s aim is to make Abitibi rise above all its peers to be “the best gold company in the world as defined by share price”.

There is a way to go.

Abitibi’s share price last traded at below 10 Canadian dollars ($7.42), compared with around 75 pounds ($96.63) for Randgold RRS.L, which Ball cites as among the best for now.

As part of his aim to deliver maximum value for shareholders, Ball says he invests his salary and bonus into company shares and lives off dividends from other investments – none of which are in rival miners.

He also says he avoids unnecessary dilution of the share price to finance the kind of acquisitions that have sapped some miners.

“There is nothing I see that’s better than our current assets that we can afford,” he said.

Editing by Adrian Croft

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