Consumers and investors had better be prepared to pay more for gold, with the industry struggling to make money at US$1,300
Consumers and investors had better be prepared to pay more for gold, with the industry struggling to make money at US$1,300. This is one of the major factors in our view supporting the price of gold and why gold prices are unlikely to collapse. And it's a view that's been lent support by Dr Mark Bristow, CEO of Randgold Resources. He commented to journalists at a media lunch in South Africa this week that the gold mining industry was fundamentally broke at a gold price of $1,300/oz and that the industry was unable to generate sufficient returns. The major factor is grade - the average grade of the industry had dropped from 2.6 g/t to just over 1 g/t over the past decade, which meant double the number of tons had to be mined to produce the same amount of gold, which was why costs had risen.
Gavin has been a senior resources analyst following the mining and energy sectors for the past 25 years, working with Intersuisse and Fat Prophets. He is also the Executive Director, Mining & Metals with Independent Investment Research (IIR).