Gold: A Blurb from canaccord this morning.
GOLD
I see my challenges as opportunities. Jamie Sokalsky, CEO of Barrick Gold (ABX), presenting at the London Bullion Market Association (LBMA) Precious Metals Conference in Hong Kong says gold discovery rates are decreasing even though exploration spending in the industry reached a record US$8 billion last year. Sokalsky highlights there have been just three discoveries in the past year, compared with 11 in 1991 and none of those can be described as "supergiant" or holding 20+ million ounces. Sokalsky adds, "I don't see a surge in gold production if we saw a gold price of $3,000. At a higher gold price, we'd still be experiencing the same challenges. I'd suggest there'd be very limited response to that higher gold price." In the past decade, there have been 27 gold discoveries over five million ounces, only one discovery out the 27 is actually operating today. "It's getting harder to find large deposits and to get those deposits into production takes at least twice as long as it might have taken a decade ago," said Sokalsky. "We're not going to see new mines coming in as fast as we thought to replace old mines that are closing." China secretly building up its gold reserves? At the same conference, David Gornall, Chairman of LBMA, said, "When comparing China to the U.S., it would seem that in China, gold asset allocation can only go in one direction [up]...The country has only 2 percent of its reserves in the form of gold compared with the U.S. at 75%." Mineweb believes the implication of Gornall's comment is that China is not only looking to increase the proportion of its reserves held in gold, but that it may already be doing so without reporting it. Mineweb notes that, "it took China six years before it made any announcement of its last gold reserve rise back in 2009, and admitted at the time that this increase had been built up over the previous period."