Gold Industry Experts Comment On USD$2000 Gold Price ~ Where To From Here?

Our Senior Investment Analyst, Ethan Perrett is joined by three respected ASX Chairmans in the Gold Mining sector;

 Watch the panel discussion anchored by Sally A Illingworth now.

This video explores the thought of Gold as a potential support to helping the Australian economy to return to a surplus. As well as identifying sectors that can assist with economic stimulus, given recent Government initiatives. In recent days, we've seen the price of Gold skyrocket, surpassing $2,000/oz. The featured panelists answered the questions below to share their thoughts on the current state of the Gold market.

Q1 - What does the rising Gold price mean for Australia's Gold Mining Sector?

Ethan Perrett (BPC):

"Barclay Pearce Capital are of the firm belief that Gold will continue to grow strongly as a result of economic uncertainty caused by COVID-19. This presents an opportunity for gold explorers and gold mining companies around the world, especially in Australia. Accompanied by a low oil price, this creates a greater operating margin and means more projects throughout the country become more feasible. "

 

Gavin Rezos (ASX: REZ)

"Developers will look to include a lower cut off grade in their resource plans, this becomes more economic offering a larger resource. For those who have an infrastructure cost, the high Gold price will offset this. For producers, some will mine high-grade and others will adjust their plans to mine at a lower-grade whilst this is economic."

 

Adrian Byass (ASX: KWR)

"This can only be a positive moving forward. This attracts capital, following companies that are making profits, paying dividends and providing capital gains. This allows access to capital for exploration companies, which if they use their money wisely, they will reap the rewards of success."

 

Philip Amery (ASX: AUL)

"This is incredibly positive for the industry, we've seen a lot of smaller companies raise capital easily in the market. For the producers, it is great in terms of trade and export earnings. This is strongly needed in the industry because of the restrictions and limitations in other sectors of the economy."

"BPC is of the view that Gold will trade stronger for longer"

Ethan Perrett

Senior Investment Analyst

Q2 - As a Gold mining company, what do you expect to see from the gold price later this year?

Gavin Rezos (ASX: REZ)

"There are various factors including the US election, COVID-19, lurking Cold Wars, interest rates and more, that support the raising Gold price. Once we have broken the psychologically important USD$2,000 Gold level, the growth can continue. The ultimate question is demand and supply."

Adrian Byass (ASK: KWR)

"Over a 6, 12, 18 month period a trend is in place which follows one direction, that is up. This is a reflection of broader macro economic and short term emotional trends. I am very comfortable that this trend will continue for the coming months."

Philip Amery (ASX: AUL)

"AuStar has based their prior budgeting and forecasts on significantly lower gold prices and that is a very safe position to adopt. On a personal level, I believe that Gold is likely to move higher over the coming few years. This is a natural function of coordinated global central bank stimulus and monetary supply that is increasing at an unprecedented rate. There are many factors that support a growing Gold price, however, from AuStar Gold's perspective we are not reliant on this."

Q3 - How does the rising USD Gold price affect Western economies with increasing debt as a result of COVID-19?

Gavin Rezos (ASX: REZ)

"Since we no longer have a Gold standard, there's been a race to devalue currencies to maximise exports. We've also got (inaudible) because everyone is doing it. We can achieve this without being a currency manipulator. Russia and China have been buying up Gold, we expect to see pressures from Russia and China as a group to move off the US dollar, that's already happening. How are they going to do that? Maybe a basket of currencies with the Gold standard behind it. That doesn't bode well for Western economies at all, but for countries that produce Gold like Australia, it's a double edge for us. It could be beneficial one way but not the other."

Adrian Byass (ASK: KWR)

"The rising Australian and American Gold price doesn't affect the economy, it's more of a reflection of the state of the economy. I see examples of this in history, in the 1970s we went through a period of strong inflation and economic problems. The Gold price was 10x higher at the end of that decade in comparison to the start. I think we are unfortunately entering inflationary pressures driven by quantitative easing. That's going to be an unstoppable force in driving the Gold price higher, as people see a way to preserve wealth."

Philip Amery (ASX: AUL)

"The Gold price is driven by both industrial supply factors and clearly by perceptions of safe haven demand. We are seeing enormous ETF inflows in the North American market in particular and around the world with investors seeking exposure to Gold. I think there's a possibility that as Gold becomes recognised as a genuine widely held store of value, although still considered an alternative investment by investors. However, if this were to flip we could see the demand for Gold aggressively rise."

 

To learn more about the status of Gold in Australia, download our 'Stocks Down Under' Gold report.