Tags: gold | production | drop

Gold Mine Production Expected to Drop

By Dan Weil   |   Thursday, 19 Nov 2009 08:57 AM

While gold production is up this year it will soon resume its long-term decline, major gold mining companies say.

That production decline will come in the face of gold’s surge to record levels above $1,100 an ounce. And, of course, the drop can help gold fly still higher.

See David Skarica's Top Gold Stock Picks for 2009 — Click Here

Precious metals consultant GFMS predicts that gold production will rise 3.7 percent this year and then fall back.

The increase “is just an interruption to a downward trend, not a secular shift back to growth,” William Tankard, senior mining analyst at GFMS, told the Financial Times.

“Supply will not be a deciding factor, but on balance it should be a price support.”

Mark Bristow, chief executive of producer Randgold Resources, told the FT that any supply increase will be temporary, caused by marginal projects being resumed because of gold’s jump.

“We will see little corrections that keep capacity alive, but the fundamental reserve base is in decline in terms of both quality and ounces,” he said.

Bristow told Bloomberg that gold is headed for $1,200.

Money management titan BlackRock also is bullish on the precious metal.

Its gold fund manager Evy Hambro said at a recent conference that central bank buying will boost gold, with central banks becoming net purchasers this year for the first time since 1988.

India recently bought 200 tons from the International Monetary Fund. China, Taiwan and South Korea also are considering shifting currency reserves to gold.

See David Skarica's Top Gold Stock Picks for 2009 — Click Here

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While gold production is up this year it will soon resume its long-term decline, major gold mining companies say.That production decline will come in the face of gold’s surge to record levels above $1,100 an ounce. And, of course, the drop can help gold fly still higher.See...
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