Publications
Partners
Colorado Springs - To hear mining executives tell it, gold
prices have nowhere to go but up as investors flock to the yellow metal to
hedge against the languishing global economy.
Gold prices have jumped roughly 40% in the past 12 months
alone, and are trading now at roughly $1 780 per ounce.
"I'm a big believer that all of the ingredients for a
higher gold price are there: geopolitical risk, economic uncertainty, inflation,"
Yamana Gold Chief Executive Peter Marrone said on Monday. "It just seems
natural to me for gold prices to go to substantially higher levels."
Newmont Mining CEO Richard O'Brien expects prices to easily
hit $2 300 an ounce by next year. AngloGold Ashanti [JSE:ANG] CEO Mark Cutifani forecasts $2 200.
That bullish outlook on gold prices has been contradicted
recently by a surge of interest in US government debt and the dollar, and a
slight dip in gold prices.
But no matter, executives say, because as gold production
slowly dwindles and economic uncertainty increases, the price will rise.
"The conditions for gold right now have never been
better," said Kinross Gold CEO Tye Burt. "Not only is it a safe haven
for investors and offers a unique alternative to currencies, but the
fundamentals of supply and demand are extremely strong."
Debt problems in Greece, US deficit concerns and political
upheaval in the Middle East are all boosting gold's price.
"If one were to ask me the question of how much each
one is affecting the price, it would be difficult to say," said Yamana's
Marrone.
"But clearly they're causing an affect. That's what gold does:
it's a natural hedge against these points of financial and geopolitical
uncertainty."
The opinion was widely shared by this week's attendees at
the Denver Gold Forum, one of the largest gatherings in the world of gold
investors, analysts and producers.
"We see the world as a minefield, and we see gold as
our own M1 tank to get through it," John Bridges, a mining analyst at
JPMorgan, said at the conference.
From tiny explorers to multinational giants, miners all said
they expect gold prices to continue their upward march.
"Directionally, the factors that have basically caused
the gold price to perform the way it has are still in place," said Aaron
Regent, head of Barrick Gold , the world's largest gold miner. "If
anything, they're intensifying."
The view of gold as a currency, not just a commodity, is increasingly becoming more popular.
"Gold is one of the few investments in the world today
that could be categorised as a safe haven," Newmont's O'Brien said.
"It's one that floats in the marketplace unlike some other fixed
currencies. It's one that no single government can decide to issue more or less
of."
And while the rapid rise in the metal's price has caused
more than a few people to scream "Bubble!" - mining CEOs, not
surprisingly, don't see one there.
"It may even be seen as the opposite of a bubble,"
said Burt, the Kinross CEO. "I think of bubbles as investment situations
with unbridled optimism, but people are moving into gold now because they're
anxious and concerned."
