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Barrick brings GATA''s message to China
Newmont Sees Gold Range
of $380-$450 in Year Ahead
By Lewa Pardomuan
Reuters
Monday, September 6, 2004
http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=6152399
SHANGHAI -- Newmont Mining Corp., the world's
largest gold miner, expects gold to trade in a range
of $380 to $450 an ounce for the next 12 months
and possibly higher because of a poor outlook for
the dollar and the U.S. economy, said its president,
Pierre Lassonde.
The Denver-based company expected more gold
firms that hedged their output to declare bankruptcy
as gold prices rose, he added.
"Gold hedge books are real liabilities that will
continue to grow and likely sink more gold
companies. Newmont has a clear policy of
non-hedging and we remain committed to it,"
Lassonde told Reuters by e-mail.
Last week Australian mining house Sons of
Gwalia Ltd said it faced bankruptcy after
discovering its mines might not have enough
gold left to meet its gold hedge commitments
and finance its foreign exchange exposures.
As gold prices have surged 60 percent from
around $250 an ounce in early 2001 to around
$400 an ounce, many producers have tried to
unwind contracts they made to sell gold at
prices set much lower than the market.
"With the gold price rising, I expect more
companies will declare bankruptcy as the
liabilities associated with their hedge books
continue to rise. For the next 12 months we
see gold trading in the $380 to $450 range.
"Should the U.S. economic situation deteriorate
more rapidly than we have forecast, it could push
the U.S. dollar down and propel the gold price up
sharply, possibly above that band," he said.
Spot gold was quoted at $400.15/400.90 an ounce
on Friday, versus $405.80/406.00 on Thursday.
"We are bullish on gold for the same reasons that
we are bearish on the U.S. dollar: very large and
increasing current account deficits, trade deficits,
and a huge swing in the budget from a surplus of
$200 billion to minus $500 billion in less than three
years," Lassonde said.
"History may be repeating itself. As in the 1970s,
we experienced a nine-year bull market in gold due
to a paradigm shift in the price of gold in its cost of
production," he said.
Over the ensuing 20 years, he said, the gold price
increased to an average of $350 an ounce from $35
while production cost rose to approximately $250
an ounce from $20.
"At this time, we don't know when the gold price or
costs of production will stabilise. But it's fair to say
that such uncertainty is another reason why we
believe gold hedging is a risky proposition for
shareholders," said Lassonde.
Hedging, the selling of yet-to-be-mined nuggets at
a preset price to lock in revenue, began falling out
of favour as gold prices rose. Hedging protects
miners when prices fall, but can backfire when
prices increase.
Newmont is virtually free of hedges after closing out
about 10 million ounces of hedges since taking over
Australia's Normandy Mining Ltd. and Canada's
Franco-Nevada Mining Corp in 2002.
"We remain steadfast in our commitment to keeping
all of our gold production hedge-free going forward,"
said Lassonde.
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RECOMMENDED INTERNET SITES
FOR DAILY MONITORING OF GOLD
AND PRECIOUS METALS
NEWS AND ANALYSIS
Free sites:
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http://www.capitalupdates.com/
http://www.silver-investor.com
http://www.thebulliondesk.com/
http://www.goldismoney.info/index.html
http://www.minersmanual.com/minernews.html
http://www.a1-guide-to-gold-investments.com/euro-vs-dollar.html
http://www.investmentrarities.com
http://www.kuik.com/KH/KH.html
(Korelin Business Report -- audio)
http://www.plata.com.mx/plata/home.htm
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http://www.plata.com.mx/plata/plata/english.htm
(In English)
Subscription site:
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Eagle Ranch discussion site:
http://os2eagle.net/checksum.htm
Ted Butler silver commentary archive:
http://www.investmentrarities.com/
----------------------------------------------------
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Michael Kosares, Proprietor
US (800) 869-5115
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and
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11742 Manchester Road
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info@mocoin.com
314-965-9797
1-800-280-9797
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15018 North Tatum Blvd.
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http://www.swissamerica.com
Dr. Fred I. Goldstein, Senior Broker
1-800-BUY-COIN
FiGoldstein@swissamerica.com
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