Pierre Lassonde on $20,000 gold price and’ most incredible margins’ ever.

If the Dow Jones to gold ratio retrace to 1:1, which it has on several events in the past, the gold price could very well ascend to $15,000 to $20,000 an ounce assuming the metal catches up to the Dow, based on Pierre Lassonde, chair emeritus of Franco-Nevada.

Lassonde retired from the board of Franco Nevada this season, but is still actively involved in the mining market. Because of the expansion of gold prices this season, coupled with falling energy costs, margins of the business have not been better, he noted.

“As the gold price goes up, that distinction [in gold price and energy prices] will go directly into the margins and you are discovering margin expansion. The gold miners have never had it so beneficial. The margins they are creating are the fattest, the very best, the absolute unbelievable margins they’ve already had,” Lassonde told Kitco News.

Margin expansions and the stock price rally that the mining sector has observed this year should not dissuade new investors by typing the space, Lassonde claimed.

“You have not skipped the boat at all, despite the fact that the gold stocks are up double from the bottom level. At the bottom part, 6 months to a year past, the stocks have been extremely affordable that nobody was curious. It is exactly the same old story in our area. At the bottom part of the sector, there’s never enough cash, and also at the upper part, there is often way a lot of, and we’re slightly off the bottom at this point in time, and there’s a great deal to go before we reach the top,” he said.

The VanEck Vectors Gold Miners ETF (GDX) 47 % year to date.

More exploration action is anticipated from junior miners, Lassonde claimed.

“I would claim that by next summer, I wouldn’t be shocked if we had been to see exploration budgets in place by anywhere from twenty five % to 30 % and also the season after, In my opinion the budgets will be up more likely by fifty % to seventy five %. I do believe there is likely to be a huge increase in exploration budgets with the next 2 years,” he stated.