Reply #73: Gold set to become even scarcer [View All]

[54anickel]

http://news.ft.com/cms/s/b997c8bc-c262-11da-ac03-0000779e2340.html

Bobby Godsell, chief executive of AngloGold Ashanti, predicted that worldwide gold production would stagnate, then fall in the coming years as large deposits of the precious metal become scarce.

He said this would support the rally in the gold price, which last week hit a 25-year high of $588 per ounce.

The South African company, the world’s third biggest gold producer, mined 6.2m ounces of gold in 2005 but expects production to be lower this year, between 5.8m and 6.1m ounces, and then increase again in 2007 as new projects come on stream.

But in an interview with the FT, Mr Godsell warned that the gold industry will find it hard to keep up current levels of production. “All of the gold majors are finding it difficult to replace their reserves. New mine production will be flat-to-declining.”

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But he added: “Most M&A activity is value-destructive and this may be particularly true in the gold sector as gold shares trade at a premium.”

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