RE:RE:Major change upcoming in the gold tradingYou make some good points RR.
Bristow from Randgold has stated that many companies are going to have to start looking to replace their shrinking reserves so many eyes will be on the Mail/Senegal trend.
In an environment of lowish gold prices, then that actually enhances the attractiveness of Diakha and Siribaya, as it looks like extraction will be open pit.....the least cost of all mining operations.....particularly considering a new oil price environment since haulage is a big cost of open pit. American oil producers are aiming to make shale oil profitable at $40 from its current $65 and if they achieve that, a whole new world of longterm low stable oil prices will emerge. All the stars are aligning to make the Boto/Karita/Diakha complex extremely attractive to any miner with sufficient risk tolerance for Africa. In this gold price environment, big deposits like Cote Lake aren't worth a nickel, so that makes the low cost open pit deposits with decent grades by far the most attractive. Any deposit in the bottom quartile of extraction costs is going to make miners salivate over it.
I agree that higher gold prices are a good thing. Obviously if IMG suddenly had an outlook of significant free cash flow coming up, they would likely be more willing to pay more for a good deposit. Still, miners look to the long term when buying a deposit, so the ups and downs of $200/oz either way makes little difference to the value in the ground.
Gold price outlook for 2015 has most experts not expecting much over $1300 on the high side, down to $1150 to the low side. Apparently every source of demand is going to show better in 2015: China, India, Central Banks will be net buyers, Comex, etc. Lower oil prices will positively affect jewelry purchases, particularly in India. ETFs have been big sellers for the last couple of years and that is expected to stop in 2015, perhaps reverse slightly. On the supply side, it is expected that supply will be static and start a decline next year as few new big operations are coming on stream. So from a supply/demand perspective, the outlook is positive. The fear premium will ebb and flow and right now, the fear premium is fairly low so there is some upside potential there too. The US$ is expected to stay high and while that has a negative effect on gold prices, it's not entirely a negative for gold miners who enjoy the benefits of lower costs in non-US operations where currencies are low while collecting revenues in high US$.