Barrick Gold’s (ABX) blatant jawboning of the market, conveniently after being able to clear Barrick’s gold hedges, is reminiscent of home builders talking up property prices.
Metal Miner: Following news of the liquidation of the hedge, Barrick’s fortunes are now aligned with the other gold majors and so it is no surprise to hear Aaron Regent, President of the company start talking the gold price up. In a report in the Telegraph newspaper, Regent is quoted as saying that global output has been falling by roughly 1m ounces a year since the start of the decade. Total mine supply has dropped by 10% as ore quality erodes, implying that the roaring bull market of the last eight years may have further to run. Ore grades have fallen from around 12 grams per metric ton in 1950 to nearer 3 grams in the US, Canada, and Australia. South Africa’s output has halved since peaking in 1970. In addition, the above ground mines of central banks have moved from being net sellers to net buyers as Asia’s central banks have gradually increased gold holdings at the expense of dollars.
All is true but is the logical conclusion that prices will continue to rise?