TORONTO (miningweekly.com) – The gold price, hovering at record levels, could reach $5 000/oz by 2014, US Gold CEO Robert McEwen said on Monday.

Central banks having to print money to fund large deficits was the main driver behind this, he said.

“Fiat currencies around the world are being expanded rapidly, and that’s eroding the base of the purchasing power of those currencies and people are resorting to gold and silver.”

McEwen is the former CEO of Goldcorp, the second-biggest gold miner by market value, and is currently CEO of US Gold, Minera Andes and Lexam Explorations.

“I think you’re four years out for gold to hit $5 000/oz,” he said on the sidelines of the MineMexico seminar in Toronto.

Gold was trading at $1 295/oz on Monday afternoon, after breaking consecutive records last week.

McEwen said Amex- and TSX-listed US Gold, which has projects in Nevada and Mexico, aimed to be a S&P 500 company by 2015. To qualify, he predicted it would need a $3,5-billion market capitalisation.

By the same time, the company planned to produce over 250 000oz/y gold and gold equivalent.

“There are only two companiens in the S&P 500 that produce gold, that’s Newmont and Freeport McMoran,” McEwen said.

“I believe there’s a huge void in the US – that they want to buy an American precious metal.”

DILUTION A PROBLEM

To grow, US Gold would consider acquisitions, but would avoid dilution, McEwen said.

“To me, the big problem with the mining industry is, that CEOs don’t own much of their companies and the resounding call from investment bankers is you can build it on your top line and your bottom line, but not on a per share basis.

“You look at Barrick, which was one of the most fabulous exploration stories out there. It goes from early eighties to now, from nothing to the biggest gold-mining company in the world, but their share price has stood still.”

McEwen owns 21% of US Gold, and advertises the fact on the back of his business card.

LEGALISE IT

One of the main issues raised at the MineMexico seminar was the security situation in the country. The Wall Street Journal reported at the weekend, that five Mexican mayors had been killed since August, as the drug wars raged on.

McEwen put forward the solution that the US should legalise drugs, which would remove the black market and help generate revenue for the state.

“If you look back to the stories of the gangsters during prohibition, they had their machine guns driving through Chicago shooting everybody up – there was lawlessness,” he said.

“We have to say we’re going to legalise drugs and forget about prohibition and take the black market out."

McEwen added that alcohol and cigarettes were significant sources of government revenue , and that drugs could contribute too. He also said 1% of the US population was  imprisoned, and many of these were because of drug-related offences.

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