Wheeler: World has entered a new era

SPOKANE - Coeur d'Alene Mines Corp. Chairman, President and CEO Dennis Wheeler told a breakfast gathering at Gonzaga University on Thursday that the world has entered a new era of enormous interest in "safe-haven" investments of gold and silver that portends an especially bright future for the company.

Wheeler, whose speech was titled, "The New Age of Precious Metals," told the crowd gathered for the Gonzaga University Dean's Business Forum, that this new era began in approximately 2005 and indicators suggest it will continue for the foreseeable future.

Factors contributing to and sustaining this renewed interest in precious metals include global economic uncertainty, expanding government deficits, inflation, and the many uses of gold and silver in jewelry and industry.

"I think we have truly entered a new era that will continue to be with us," Wheeler said. "These are some of the reasons why this particular age, this new age, is different than any era we have seen in the past. It's the individual investors, people like yourselves and ourselves, driving this new interest in gold and silver these days really in enormous proportions."

The price of silver jumped a record 49 percent in 2009, above $18 an ounce, outgaining gold by a 2-to-1 margin, he said.

"Silver had the best performance of both metals in 30 years (in 2009)," he said. Silver is increasingly seen as a less-expensive, long-term investment as it's the world's most widely used industrial metal, and its demand for use in jewelry is growing in developing countries. All of these factors give the Coeur d'Alene, Idaho-based company - recognized as a worldwide leader in silver production and a significant producer of gold - reason for optimism.

"No metal today has as many applications as silver," Wheeler said. The demand for silver includes everything from jewelry production to widespread industrial applications as a low-priced conductor of electricity. It's also increasingly used in clean-water applications for its ability to kill harmful bacteria, in bandages where it prevents infections from entering wounds, and in the growth and demand for coins.

The increasing demand for gold also is driven by its widespread use in jewelry and its many industrial purposes as well, such as the highest-quality wire for fail-safe installations such as missiles "where you have to have the highest integrity and reliability," Wheeler said. "About 80 percent of the gold ever produced is held today by the central banks of the world. Far and away the leading holder of gold is the United States of America."

It has been only five years since the creation of exchange-traded funds backed by silver and gold, Wheeler said, "yet the explosion of these investment vehicles is quite phenomenal. For silver alone, we have 400 million ounces worldwide that are held by silver exchange-traded funds. The Silver Institute, of which we are a leading member, was responsible for the creation of this vehicle."

Wheeler, who returned from China this week, said the future of the gold market will emanate from the Far East where there is a strong cultural attachment to gold, and a rising middle class with growing disposable incomes. India and China together represent approximately 43 percent of the world's jewelry demand compared to 9 percent demand from the United States, he said.

"This year, China will eclipse Japan as the number one economy of the world," Wheeler said, adding the International Monetary Fund and the World Bank both forecast China's Gross Domestic Product to grow by 10 percent and 9.5 percent, respectively. "Gold demand has grown in China at an average rate of 13 percent, per anum."

Wheeler recalled when he traveled to China 12 years ago and saw thousands and thousands of bicycles. "Everyone went to work on bicycles," he said. "Today, there are bicycles but the streets and avenues are crowded with BMWs, Mercedes, Audis and just about every kind of vehicle you can imagine."

This growth in China and similar growth in India present terrific opportunities for Coeur d'Alene Mining Corp., Wheeler said.

"I frankly think we're in for many good days at Coeur," said Wheeler, who attributed approximately two-thirds of the company's revenue to silver production and approximately one-third to gold. "We're very optimistic about this company in the Inland Empire and will continue to provide opportunities to students like the outstanding students at Gonzaga University."

Wheeler has been chairman of the Board of the Coeur d'Alene Mines Corp. since 1992 and has been CEO of the corporation since 1986. He also was recently appointed to the Executive Committee of National Mining Association.