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Gold Executives Bullish for 2013

December 24, 2012 - More than 80 percent of gold executives expect a rise in the price of gold in 2013, according to the PwC Gold Price report was released last week. The report surveyed major gold mining operations and junior gold mining operations.

The high gold prices since 200 add substance to the gold executives’ optimism, according to Michael Cinnamond, partner and leader of the B.C. mining practice at PricewaterhouseCoopers.

The report found that reasons to be bullish on gold lie in its relatively narrow applications as jewelry and a store of wealth in light of the political uncertainties in the U.S. and the economic uncertainty in Europe. Additionally, central bank buying continues to underpin higher gold prices, which is a reversal of the last two decades in which nations were net sellers of gold.

As the price of gold stabilizes following the worst week in four months, many investors and analysts are looking forward to the forecast for gold in the coming year. The fiscal cliff debate has created a serious drag in the raw commodities markets and investors, particularly those who booked profits and went on holiday vacation, are now forecasting into the New Year when the cliff debate will have found some reasonable resolution so markets can continue on underlying fundamentals.

In Cinnamond’s view the higher prices in gold have coupled to a shift in focus by gold executives to keep a lid on the cost of production. He points out that it’s not growth at all costs anymore as executives are being more careful about what they’re acquiring.

An analysis included in the report shows that 20 of the 46 largest TSX-listed gold mining companies have cash reserves greater than $500 million. Cinnamond said the cash reserves, combined with the shortage of available cash for smaller junior gold companies, means senior mining companies are looking for juniors to buy out.

Cinnamond’s analysis states that targeted smaller companies can benefit from the exchange provided their project is sufficiently large or capable of being developed in the near term. He believes smaller companies are encountering the cash shortage in the face of significant opportunities for projects.

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Jonathan Monroe

Senior Staff Writer - Gold-Bullion.org

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