Gold to scale new peaks as mining costs grow
By Jan Harvey and Anna Stablum
27 August 2008
LONDON (Reuters)
Gold prices are likely to scale new peaks as market fundamentals tighten
because producers need at least a 20 percent rise in bullion prices just to
make new investment viable, a leading fund manager said on Wednesday.
"Gold mining is a very complicated and expensive business and you really
need to see the gold price a lot higher before you see any increase in gold
production," Ian Henderson, who manages around $5 billion at JP Morgan's (JPM.N:
Quote, Profile, Research, Stock Buzz) Global Natural Resources fund, told
Reuters.
"(Gold) should have a sustained price level of over $1,200 an ounce before
we see any significant new mine build," he said.
His concerns over miners' margins echoed those of Gold Fields (GFIJ.J:
Quote, Profile, Research, Stock Buzz) chief executive Nick Holland, who told
Mining Weekly the company would need to see a gold price of $2,000 an ounce
to replace its infrastructure.
"We love gold. We have a substantial part of our portfolio in gold mining
companies," added Henderson. "I think the gold price will surpass its
previous peak."
Gold prices hit a high of $1,030.80 an ounce in March.
The platinum market was also looking "fantastic", Henderson said. Prices
have slipped by more than a third since they struck a record high of $2,290
an ounce in March, leading a number of analysts to suggest the precious
metal may have been oversold.
"The platinum market is going to be in deficit until probably 2010 -- and
that means prices will continue to be high," said Henderson.
From www.reuters.com