Gold Mining Industry Analysis By: Robert 6/6/2010 The Gold Mining Industry has experienced a huge amount of growth since the beginning of the financial crisis. With the price of gold being at $639 in January 2007 before the beginning of the financial crisis and now in June 2010 the price of gold reaching $1220, there is no denying the interest of gold between investors and governments. Investors are seeking ways to protect themselves from inflation and any other type of financial crisis that may be on the horizon.
With the uncertainty that the world financial markets are facing over the next three years and the relation that gold has with the worlds currency, the U. S. dollar, it can be safely assumed that the price of gold will continue to rise and thus will mining ventures to harness this precious metal. As the price of gold rises the value of the dollar decreases and gold will continue to benefit from any type issue that the U. S. market is facing; with the May U. S. job data reporting that fewer jobs were added to the economy than was previously expected, this was able to send the price of gold over $1200.
This all bodes well for the gold mining industry and other related fields that deals with the supplying or selling of the precious metal. However, one must be aware that there is a huge supply of gold surpluses. “Since 2002, for example, total demand for gold from goldsmiths and jewelers, and dentists, and general industry, has come to about 22,500 tonnes. But during the same period, more than 29,000 tonnes has come on to the market. The surplus alone is enough to produce about 220 million one-ounce gold American Buffalo coins. (Christian Science Monitor 2010) It is difficult to forecast what will be in store for this industry over the next three years because of intertwines with the market and the health of the world economies. However, with many experts assuming that there may be other financial crisis down the road one can safely assume that gold will be a safe short term investment for the next few years and this will help to continue the growth that the gold mining industry has seen over the past few years. There are many competitors in the ndustry of gold mining, Newmont Mining Corporation happens to be one of the leaders in the field. In 2007, Newmont became the first gold company selected to be part of the Dow Jones Sustainability World Index. This exemplifies the management structure and their ability to demonstrate transformational leadership in a volatile industry. In the midst of the financial crisis Newmont was able to record several company records in 2009: ? Record revenues of $7. 7 billion, up 26% from 2008; ? Equity gold sales of 5. million ounces and equity copper sales of 226 million pounds; ? Equity gold sales and costs applicable to sales in line with original 2009 outlook; ? Record net cash from continuing operations of $2. 9 billion, up 109% from 2008; ? Gold operating margin increased 28% from 2008 on a gold price increase of 12%; ? $22. 3 billion in total assets; ? Acquired the remaining 33. 3% interest in Boddington; ? Raised $1. 7 billion of equity and convertible debt to fund the Boddington acquisition; ?
Commercial production was achieved at Boddington Gold, which will be Australia’s largest gold mine at full production; ? Included in the Dow Jones Sustainability World Index for the third year in a row (Figures recorded from http://www. newmont. com/about/company-glance) These figures demonstrate the high growth potential that some gold mining companies have been able to realize in a combustible world economy, this is directly linked to the product that they are providing and the demand increase we have experienced within the past few years for gold.
Newmont Gold Mining Corporation has been an industry leader for several decades and May 2010 they were spotlighted by Gold Speculator with this listing: “The gold group, represented by Newmont Mining, was the best-performing group for the week, rising 6 percent. The price of gold increased nearly 2 percent during the week. ” (Gold Speculator 2010) “The miner has acquired a reputation as a slow-growth outfit relative to its large-cap gold mining peers, such as Barrick, Goldcorp and Kinross. (Newmont expects to produce 5. 3 million and 5. 5 million ounces in 2010, basically flat with a year earlier. But the elevated price of the yellow metal, which has traded in a range above the mythic $1,000-level since touching its all-time high in early December, has helped Newmont reap profits. ” (The Street 2010) Newmont will continue to be recognized for its achievements within the industry and will continue to be one of the main standard bearers for all gold mining corporations. As individuals and governments continue to seek the safety from volatility of the world’s currencies, Newmont will continue to supply the sought after product of gold and will continue their exploration of other precious metals.
References: http://www. csmonitor. com/Money/Mises-Economics-Blog/2010/0531/If-gold-supplies-are-rising-why-aren-t-prices-falling http://in. reuters. com/article/idINIndia-49052520100604 http://www. safehaven. com/article/6906/the-dollar-gold-relationship http://www. newmont. com/our-investors/stock-data/stock-info http://www. gold-speculator. com/us-global-investors/28244-gold-group-represented-newmont-mining-best-performer-week. html http://www. thestreet. com/story/10737523/newmont-mining-tops-street-views. html