More industry thoughts = higher POGODJ DJ. Company Bosses, Analysts See Solid, Rising Gold Price
-- Repeating story from earlier
By Robert Kozak
Of DOW JONES NEWSWIRES
LIMA (Dow Jones)--Gold prices, which stumbled in recent years before rallying
of late, should remain solid and could rise in coming months, industry bosses
and analysts say.
"It won't go to $350 to $400 an ounce tomorrow morning, but there is good
fundamental demand on the investor side," said Newmont Mining Corp's (NEM)
president, Pierre Lassonde.
A number of factors are behind recent optimism, according to participants in
an international gold mining conference that ended late Friday in the Peruvian
capital.
The falling U.S. dollar, a burst of demand from Japan and elsewhere, a
dwindling hedge book, potential falling supplies, and a global economic
recovery all could give a boost to gold.
Alberto Benavides, the 81-year-old chairman of Compania de Minas Buenaventura
SAA (BVN) said, "I see better prices, although they will not be spectacular."
His forecast was for a price of between $280 and $320 an ounce for the next
years, although he added that "markets are unpredictable."
UBS Warburg research director Tom Meyer forecast that gold will end this year
at $312 an ounce and will reach $325 an ounce in the longer-term.
Bruce Alway, a senior analyst with Gold Fields Mineral Services, forecast a
gold price of between $285 and $315 an ounce.
"Even if the rally in gold has been hesitant, we think it would be unwise to
bet against it," Alway said.
The June contract settlement price on Comex on Friday was $310.90.
US Dollar Seen Weakening, Exploration Down
A weakening U.S. dollar, long predicted, would boost gold prices, the experts
noted.
"Its price is inversely correlated to the U.S. dollar and its role in the
world," Newmont's Lassonde said. "Most economists believe that the U.S.
currency is overvalued."
The rising gold price has also put a crimp on hedging. Those companies that
don't hedge, such as Newmont, say that hedging depresses the spot price.
Analysts also see some decline in output in coming years, the result of a
cutback in greenfield explorations over the last few years when prices were low
and both junior and senior miners cut back looking for new deposits.
"Production has leveled off globally and will start to decline," HSBC's
senior gold analyst, Victor Flores, said.
Demand Seen Rising
One of the World Gold Council's directors, George Milling-Stanley, noted that
the trade group has set up an aggressive campaign to market gold, particularly
in India, the biggest buyer.
He noted that buying by Japanese investors in the first quarter of this year
was sharply higher.
He was also optimistic that European central banks will renew their pact to
limit gold sales.
Other analysts said that investment demand for gold has increased sharply
over the last six months, not only in Japan but elsewhere as well.
"Depressed demand has kept down the price," said HSBC's Flores. "But it has
started to improve, including in some markets where we hadn't expected it to."
UBS Warburg's Meyer said that the bank is increasingly optimistic that a
recovery in base metal prices, tied to an improving macroeconomic outlook,
would be mirrored in rising gold prices.
"These are good times for the gold industry. It is the end of a very long
bear market," said Robert Godsell, the chief executive officer of Anglogold
Limited (AU). "I would expect it (rising gold prices) to be more of an
incremental and gradual movement," he added.
Those higher prices will be crucial for the industry, one official said.
"Even at $300 an ounce, the industry isn't in the best of shape. We still
aren't earning our cost of capital," Newmont's Lassonde said. "We do need
higher gold prices to stay in business."
-By Robert Kozak, Dow Jones Newswires; 511-221-7050; peru@dowjones.com