Current gold run just the beginning - Thompson
Posted: 05/21/2002 04:00:00 AM | © Miningweb 1997-2001
TOKYO - Spot gold's overnight gains to its highest levels since February 2000 are sustainable and part of a bullish trend suggesting further potential, according to Chris Thompson, World Gold Council chairman and chief executive of the world's fourth largest gold producer, Gold Fields (GFI).
In a telephone interview with Dow Jones Newswires from Johannesburg, Thompson stressed that all the essential conditions for gold to rise higher are in place.
Namely, a weaker U.S. dollar, Middle East tensions and lingering doubts surrounding the strength of the U.S. economic recovery. "Quite honestly, all the risks that I can see are to the upside," he said.
Spot gold was trading around US$316.05 a troy ounce in Asian trade early Tuesday, well above US$312.45.oz late Monday.
Insisting that supply over the coming years will continue to tighten, Thompson's longer term outlook is also bullish.
Although Gold Fields' production may have benefited from recent acquisitions, the gold industry's overall production will continue to decline in coming years. "It's a little like shuffling deck chairs around," he said.
Commenting on some independent studies that have predicted a 30% decline in industrial production worldwide over the coming 10 years, Thompson said some of the figures appear overly optimistic.
Gold supply is certainly falling in South Africa, the world's largest gold producing nation, he noted.
He said if the industry were to try to take advantage of the yellow metal's recent rise by boosting production, "it's a long pipeline, somewhere between five-seven years, so nothing is going to change the situation straight away."
Thompson insisted that even if gold should rise as high as US$350/oz, producers who belong to the hedgers camp and still have room to short, are unlikely to lock in more attractive prices. "On the contrary, pressure will only grow on producers to reduce their positions," Thompson said.
Elected to the WGC chairman's post in April, Thompson is helping oversee the smooth appointment of a successor for Haruko Fukuda, who was WGC chief executive for the past three years. Thompson says he is out to "restructure and remodel" the World Gold Council.
Although hesitant to say much more before the issuance of a strategic review of the Council's objectives by consulting firm Bain & Co. in June, he said small-time gold investment, although nascent, needs encouragement, said the news wire service. |
