Hedge funds slash bullish wagers on gold over Trump election win
Hedge funds and other large speculators boosted net-long positions by 11% to 197,362 as of Nov. 12, the lowest in 14 weeks.
BusinessLive reports Gold Fields, the world’s fourth largest gold producer, is not averse to merger and acquisition activity but will not rely on it, said CEO Nick Holland on Monday.
The company, which continues to target five million ounces in development or production by 2015, has spent the last two years aggressively growing its production according to BusinessLive.
Growing in any fashion other than through acquisition is difficult although at an overall discovery cost of $33 an ounce, organic growth is certainly cheaper than buying production according to Holland who told BusinessLive: “Gold is now scarce and it’s costing more and more to find less and less.”
Analysis by investment bank Standard Chartered shows project plans of the big five gold producers by market cap suggest average production growth of only 4% in the next five years.
MINING.com suggested last month that junior and mid-size players start buffing up their projects: Standard Chartered has estimated that the world’s six largest mining companies will amass $144 billion in cash over the next two years and quoted Ric Ronge of Pengana Global Resources Fund: “We’re not expecting a doomsday outcome for the miners and especially the bigger companies, which are the potential acquirers.”
The gold sector is expected to generate much of the M&A activity in the resource sector as big players seek to secure new supplies. So far this year more than 430 gold miners have been taken over.
MINING.com reported mid-October after slumping to the level of high teens at the height of the 2008 banking crisis, in 2011 acquirers have been willing to pay an average premium of more than 50% on the value of the shares of a target during the prior month.
Read more on M&A activity in the mining sector…
