The largest gold mine in the world, Barrick Gold (NYSE:ABX), said it sees gold prices in 2011 "easily" surpassing $1,500 an ounce.
Barrick CFO Jamie Sokalsky cites the underlying supports which should ensure gold continues to rise, as the reason for his optimism.
Those supports include the European sovereign debt crisis which won't go away, geopolitical circumstances, macroeconomic issues, and supply and demand.
Taken together, Sokalsky is right, there is nothing to justify believing those issues are going to go away any time soon, and that guarantees the price of gold will continue to go up until it does.
Although Sokalsky didn't point to it specifically, the expected near-future quantitative easing by the Federal Reserve will be another part of the support foundation for gold.
At the London Bullion Market Association meeting, on average those attending believe gold prices will stand at over $1,400 at the same time next year.
As for how Sokalsky likes that potential in reference to Barrick, he sees them positioned strongly to move up with the price increase of gold, saying the elimination of hedges and prices locked in of future production concerning forward sales is good news for the company and shareholders.
Even though cash costs estimates will probably be at the top end because of royalties related to the increase in gold prices, that also will help increase margins for the same reason, with margins versus cash costs growing to over $700 an ounce in the second quarter.
Showing posts with label Gold Supply. Show all posts
Showing posts with label Gold Supply. Show all posts
Monday, September 27, 2010
Friday, April 2, 2010
China Running Out of Gold?
China's Gold Supply
China has increased gold production in the country in a relatively few years to become the largest gold producer in the world in 2007. That surprised everyone at the time because to do it China's output grew at an extraordinary annual rate of 84 percent.
At that rate of production, the question must be raised as to whether China is going to run out of gold any time soon.
If they continue at the production rate they're currently at, China would run out of gold in about six years. That of course assumed no other gold is found and no mines come online.
But it does take time to get mines ready for production, so the supply of gold in China is going to pull back in the near future, and it's something to keep in mind in the years ahead.
One other interesting factor, is demand for gold in China is growing at a rate of about 13 percent annually, with the majority of that being used for jewelry. India has largely been the retail leader in that area for decades, and it didn't have much effect on the prices of gold. But add China retail jewelry demand, and you could have a demand for gold unique in history, as far as the amount of that demand is.
Right around 80 percent of China's demand for gold is from the jewelry industry.
As they get used to investing in gold - which they will because the government is encouraging them in that direction - that will create even great demand with a diminishing supply.
Anyway, we're in for interesting times for gold, and if China does begin to run out of gold, or at minimum assuredly slow down significantly in production, it's anyone's guess as to where the price of gold will go if investment demand continues for years and a significant jewelry demand from China creates a sigificant secondary market for the metal.
China has increased gold production in the country in a relatively few years to become the largest gold producer in the world in 2007. That surprised everyone at the time because to do it China's output grew at an extraordinary annual rate of 84 percent.
At that rate of production, the question must be raised as to whether China is going to run out of gold any time soon.
If they continue at the production rate they're currently at, China would run out of gold in about six years. That of course assumed no other gold is found and no mines come online.
But it does take time to get mines ready for production, so the supply of gold in China is going to pull back in the near future, and it's something to keep in mind in the years ahead.
One other interesting factor, is demand for gold in China is growing at a rate of about 13 percent annually, with the majority of that being used for jewelry. India has largely been the retail leader in that area for decades, and it didn't have much effect on the prices of gold. But add China retail jewelry demand, and you could have a demand for gold unique in history, as far as the amount of that demand is.
Right around 80 percent of China's demand for gold is from the jewelry industry.
As they get used to investing in gold - which they will because the government is encouraging them in that direction - that will create even great demand with a diminishing supply.
Anyway, we're in for interesting times for gold, and if China does begin to run out of gold, or at minimum assuredly slow down significantly in production, it's anyone's guess as to where the price of gold will go if investment demand continues for years and a significant jewelry demand from China creates a sigificant secondary market for the metal.
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