Gold Traders Need to Stabilize Price

An executive of one the leading gold mining firms in Australia said that prices of gold should go up its usual levels through 2015 to avoid a “wave of rationalization” that is affecting many other sectors in the industry.

Speaking before the Melbourne Mining Club, Gold Fields executive Nick Holland said that costs are rising everywhere. If gold prices do not soar, several projects may be discontinued in the years to come.

Trading for a spot gold yesterday closed at $US1622.18 per ounce. According to Holland, several analysts project this will even go down to $US1200.

At this point and when this happens, the industry would not be able to sustain itself.

Holland’s sentiments came at a time when other miners have been making profit margins of about $1000 an ounce. According to the executive, however, these are “bogus” claims because it does not include any costing for corporate and capital.

He added that investors are not fooled by these claims and the only sector interested is the government’s tax collectors.

The mining industry, meanwhile, is set to see cost further increasing in the years to come as price of energy is rising. For gold that is valued at $US2000 per ounce, profitability should remain as it is, if not even higher.

Several investors looking for profit in gold have already moved on to exchange-traded funds for its investments, and this scenario is also creating a trend that the industry must look into.

Gold Fields operate at mines in Western Australia and its base in South Africa. The company said it is planning on acquiring another mine in the country soon.