GOLD: Surge in supply and demand
By Gwen Robinson in Sydney
Surging production in the Australian gold industry coincided with record global gold demand in the fourth quarter of 1998, according to Australian data from the World Gold Council.
"The big story of 1998 was of a growing appreciation for the role of gold as a monetary asset," said George Milling-Stanley, the council's market analysis manager.
In the US, fear of the "millennium bomb" and concern over a possible stock market correction drove bullion coin purchases to record levels.
In Japan, "big bang" financial reforms triggered renewed interest in gold's value in portfolio diversification, while there were signs of recovery in gold investment demand in some troubled Asian economies.
Soaring fourth-quarter demand set a recovery trend after a poor start to the year. Demand in countries monitored by the council - the 27 countries covered account for 80 per cent of global demand - reached 806.6 tonnes, up six per cent from a year earlier.
Another happy coincidence for gold producers worldwide was the advent last week of the Lunar New Year, which could significantly lift gold consumption in Chinese communities, according to Mr Milling-Stanley.
Under the 12-animal Chinese zodiac, the Year of the Tiger, which ended last week, was a "traditionally inauspicious year to give gold gifts", he said.
Aggregate demand in China, Hong Kong and Taiwan fell 23 per cent in 1998 to 314.6 tonnes. The new Year of the Rabbit may reverse that trend.
Australia, meanwhile, produced a near-record 312 tonnes of gold in 1998, said Surbiton Associates, a Melbourne-based industry consultant.
Fourth-quarter production of 81.1 tonnes brought the year's tally close to 1997's record yield of 314.5 tonnes, said Sandra Close, Surbiton managing director.
Miners increased yields by treating higher grade ore in the final quarter, while production from new projects outweighed the impact of operations winding down or closing, she said.
Weighted average costs were stable in 1998 after falling sharply in 1997, while the higher Australian-dollar spot gold price for most of 1998 helped improve margins for gold miners.
ft.com |
