Gold industry seeks to polish bullion's image for new millenium
By Alden Bentley
RANCHO MIRAGE, Calif., April 18 (Reuters) - Once upon a time gold sold itself -- Spain's conquistadors were mad for Incan bullion and don't forget the nugget-crazed 49ers of the California gold rush three centuries later.
But times have changed and players in the gold market believe the yellow metal needs some savvy marketing to regain its luster for the 21 century.
This week 150 North American bullion miners and investment experts gathered here to discuss Internet-age ways to buff the image of the classic ``old-economy' asset, now out of fashion as an adornment and deemed not sexy enough even by staid central bankers lured by better yields in other asset markets.
``One of the things as an industry I don't think we've been terribly good at is marketing our product. We pour a piece of bullion and often from a producer point of view that is where it ends,' John Carrington, vice chairman and chief operating officer of Barrick Gold Corp(Toronto:ABX.TO - news) told Reuters.
The Washington, D.C. -based Gold and Silver Institute convened its annual conference here Sunday on the topic of the Accelerating Pace of Change in the Precious Metals Industry.
Haruko Fukuda, CEO of the World Gold Counci, the main industry-funded marketing organisation, told listeners Monday that the industry must discover and generate ways to make gold ``relevent' to the 21st century --making it more attractive to body-piercing teenagers and internet traders alike.
The forum was buzzing about a ground-breaking online marketing venture announced last week which pools the resources and expertise of the world's largest gold miner, a major brokerage house and a bullion refiner.
GoldAvenue, a partnership of South African miner AngloGold Ltd , J.P. Morgan & Co Inc (NYSE:JPM - news) and Proudits Artistiques de Metaux Precieux, is being touted as the first company to offer products and services for businesses, investors and consumers of gold primarily via the Internet.
AngloGold is at the vanguard of the industry's push to market gold as both an investment and an object of desire on par with diamonds.
The giant South African company actively markets its product, unlike many of its global mining peers, who are experts at finding and retrieving the metal from the ground but not at promotion.
``The key to survival for the mining industry is ultimately increasing the demand for jewelry,' said Paul Burton, editor of mining publication World Gold. ``For too long, producers have abdicated their responsibilities in this area.'
Some experts said focusing on jewelry demand is risky for the industry, noting that consumption is very price sensitive, adverse to volatile prices, and likely to dry up if the industry manages to improve bullion's price fortunes too much.
``Historically, the lower gold goes down the more jewelry is sold and the higher gold goes the less jewelry is sold. That is the way it is,' asserted gold investment veteran Harry Bingham, president of Van Eck Associates Corp.
``They should be concentrating on the monetary interest in gold in the public,' he said.
Investors have been treating the gold sector as a relic of the old economy. Gold company market valuations were caught in the back eddies of soaring high tech shares, while bullion prices last year sank to their lowest in 20 years.
Current spot prices near $280 an ounce are well below the estimated $340 to $350 an ounce global cost of production. Low prices have killed some high cost producers and raised speculation about an eventual industry consolidation.
Once a preferred safe haven, gold rose slightly during Wall Street's hair-raising stock plunge Friday, though mining shares soared and were one of the only bright spots in the financal sector.
Many in the precious metals industry look with envy upon the success of South Africa's gem giant DeBeers, which controls most of the world's trade in diamonds.
``I am an admirer of DeBeers' success with diamonds, how they have managed to spread the word that diamonds are a girl's or a woman's best friend,' Fukuda said.
Diamonds are in vogue in the booming United States, where sales rose 12 percent in 1999, the eigth consecutive increase. DeBeers has been extremely adept at sustaining the cache of its rocks in the booming economy but also in slower times.
Some 80 percent of the 2,550 metric tonnes of gold mined annually now ends up in jewelry. As a top setting for rings and pendants, it can piggyback off DeBeers' success somewhat.
But white metals are an even hotter jewelry look at the moment, though the buzz about platinum and silver mask record demand for gold, especially from recently deregulated markets in India, the world's top jewelry consumer, and Asia.
``It is perhaps the world's most widely-known brand -- G-O-L-D. It's just that it's under threat,' said Kevin Crisp, director of precious metals at Credit Suisse First Boston.
``What you see are positive stories about platinum or diamonds,' he said. ``Of course the gold jewlery market, as we tend to forget is huge, and it has been growing. Yet it has this negative aura.'
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