Gold price up over 1%, closing in on new record
Bullion is now 18% higher for the year, boosted by anticipation of Fed loosening as well as significant buying by central banks.
Nevada expects to dodge the looming gold “production cliff” predicted by Canada’s National Bank Financial, reports the Las Vegas Review-Journal.
Experts said two main factors will help the state avoid the coming gold-mining crunch — miners there are bucking the trend of declining new deposits and higher commodity prices will support more exploration and output. Plus, theories about gold as well as industry conditions can change over time.
The Nevada Mining Association said it’s harder to find reserves but it’s possible and miners in the state are still finding minerals.
University of Nevada, Reno professor John Dobra, who specializes in natural resource economics, agreed with the NMA and said the state has had some substantial new discoveries.
In the last year, Newmont Mining Corp. suggested its Long Canyon project near Wells could have triple or quadruple its estimated 2.6 million ounces of gold.
Barrick Gold Corp. stated in February it has doubled the estimated resource at its Goldrush exploration project near Elko from around 7 million ounces in fall 2012 to 14.1 million ounces this month. It also said there’s potential for an additional trend east of that project and the site’s resources are growing.
Dobra also said miners are barely scratching the surface in areas near existing mines.
With the decrease in supply, the banker’s report forecasts higher gold prices.
The Nevada Division of Minerals said those higher prices for gold could lead to improved supplies since they would open up marginal or lower-grade ore bodies for development.
Additionally, major gold miners will hunt for acquisitions from smaller exploration and development companies. Newmont did this with Long Canyon. Barrick did it too and ended up with northern Nevada’s Cortez mine, the second-largest gold mine in the world.
Finally, Dobra noted that theories about gold running out have been around for awhile, much like peak oil theories, and said he saw similar predictions in trade journals a decade ago.
Newmont has also said it’s not the first time forecasts of steep production declines have been put out. The problem with them is they can hinge on current industry conditions and things do change.
Related: The looming gold ‘production cliff’
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