Hi everyone: Here is an interesting article about the pirce of gold that could benifit WRM:
Price of gold ready to rebound
Rising inflation, drop in equity markets should boost metal, Placer Dome boss says
Timothy Moore
The Ottawa Citizen
VANCOUVER -- Placer Dome Inc. president John Willson said the stage is being set for a rebound in the price of gold, which has fallen 15 per cent this year.
Gold prices should get a boost as wage demands accelerate inflation, the German mark disappears into Europe's common currency and surging world equity markets drop in value, said the head of North America's third largest gold producer.
In addition, Mr. Willson said a rebound in the price of gold may get an extra push from investors who will need to buy the metal to offset bets they have placed that it will fall further.
Mr. Willson said the outlook is positive because demand for gold remains strong, especially in India and China. The World Gold Council yesterday said demand rose 11 per cent in the second quarter to a record 723 metric tons.
"I think there could well be a swing back to gold as a favored reserve," Mr. Willson said, although he was reluctant to say when.
"It's difficult to see how it's going to get back to $380 U.S. (an ounce) this year," Mr. Willson said. "But I'll bet it will be back to that kind of level as an average next year."
During the past 14 years, gold had an average price of $384 U.S. an ounce, Mr. Willson said. "I don't think we'll see a major deviation (from the average) in the medium term," he said.
Placer Dome is making its exploration and mine development decisions based on expectations that gold will average $375 U.S. an ounce in constant dollars during the next 10 years, Mr. Willson said.
The price of gold has led Placer Dome to review production at its high-cost Detour Lake mine in northern Ontario. A decision on how to proceed is expected to be made during the third quarter, he said.
In addition, Mr. Willson said a decision is "imminent" on what to do with the Mulatos property in Mexico and that it "probably" will be developed into a mine.
Mr. Willson, 57, a third-generation miner who studied at the Royal School of Mines in London, said gold is not simply another commodity as some people now are suggesting. "Gold is cash. It's very liquid," he said.
While gold may have lost some of its attraction in the developed world because of all the other financial products available to investors, it retains a special status in India and China, Mr. Willson said. India is the world's largest gold consumer.
As for the recent high-profile gold sales by central banks, such as the Reserve Bank of Australia, Mr. Willson said no one appears to notice that there were more central banks buying gold than selling it last year. Key buyers were Russia and China, he said.
Mr. Willson said overall central bank holdings were "very, very stable."
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