Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Gold prices will remain high this year, but are unlikely to rise above the record high reached in 2011, says the latest report by U.S.-based mining consultants CPM Group.
In its annual Gold Yearbook 2012 released yesterday, CMP predicts that despite having hit their “cyclical peak” last September, gold prices this year could make of 2012 the 11th consecutive year of record annual average gold prices.
Growing supply versus a larger global pool of investors for gold are combining to put a floor under the market, and prices are expected to remain firm, says the company but “without the parabolic rallies of the recent past.”
“We are looking for the price to stay above $1,500 [an ounce] this year and above $1,400 over the next few years,” says Jeff Christian, Founder and Managing Director of the CPM Group.
The main reason, explains the report, is that although uncertainty over worldwide economic conditions still prevails, there are no more fears of the global financial system imploding. No longer fearing an economic meltdown, investors have stopped purchasing gold as a panic buy.
Investment bank Goldman Sachs, however, thinks differently. This week, it sent a note to its clients restating its forecast for the precious metal, which would set a new record at $1940 per ounce within the next 12 months.
“We believe that the macro environment is likely to soften in second quarter with few near-term upside catalysts other than increased tensions in the Middle East,” Goldman was quoted as saying in Bullion Vault.
CPM Group is a New York-based independent commodities research and investment banking company, and its annual forecast is widely followed by the gold market.
Gold prices hit two-week highs above $1,690 an ounce on Tuesday after posting their biggest one-day rise since late January in the previous session.
