Mining Journal > Finance > Stockpile: Bullion in record territory, again

Gold continues to reach new heights, lifting to a new record this week in London as investors again look at the precious metal as a safe haven. A falling US dollar (which dropped to a five-week low against the euro) is the major reason for bullion’s push to a new high of US$1,281/oz.

Marcus Grubb, managing director of investment at the World Gold Council, said the high was recorded against a sluggish economic backdrop and uncertain public finances in the US and Europe.

He said: “The continued strength of the Chinese economy leading to a gold-enhancing appreciation in the Renminbi against the US dollar has spurred the market.

“Following the purchase of 10t of the IMF gold by the central bank of Bangladesh last week, rumours abound of official sector buyers coming into the market, and gold is clearly in focus as a reserve asset in the current macros and financial climate.”

And it is expected gold will climb even higher before the end of the year, with experts predicting it will move above US$1,300. GFMS concluded "gold could easily spike comfortably above” that barrier, in an update on its Gold Survey 2010.
The gold producers listed in London responded to bullion’s latest spike in what was a generally positive week on the main market.

Centamin Egypt Ltd, whose share price recently reached an all-time high, had a topsy-turvy week after making two announcements. The Western Australian-based company fell more than 8% on September 13 after cutting its 2010 production guidance by up to 20%. However, just two days later, Centamin jumped more than 7% after increasing its proven and probable reserve at the Sukari project by 28%, leaving the company in the end marginally higher for the period.

Hochschild Mining plc, which produces silver and gold in the Americas, added 6%. The company last week saw a positive scoping study for its 30%-owned Inmaculada operation. Its deputy chairman, Roberto Danino, generated £3.7 million from the disposal of shares during September.

Central Rand Gold Ltd, albeit up to just £0.03/share, was the week’s biggest riser, gaining almost 50%.

Kazakh-miner Eurasian Natural Resources Corp (ENRC) has shoved aside negative press regarding the Kolwezi tailings project in the Democratic Republic of the Congo (DRC) after being upgraded by Credit Suisse.

Canada’s First Quantum Minerals this week launched legal action against ENRC over its purchase of the majority rights to the copper-cobalt project, saying the sale went against an international arbitration ruling. Despite this, Credit Suisse pointed out the quality of ENRC’s assets in Kazakhstan. ENRC's share price rose 9% on the reassurance.

The major miners all improved, with Xstrata faring the best with a gain of more than 4%. Rio Tinto and BHP Billiton both added around 3%.

On AIM, Solomon Gold plc led the way with a 68% rise after it greeted “exciting” assay results from its Fauro project on the Solomon Islands.

An encouraging independent study on Ormonde Mining’s Barruecopardo tungsten project in Spain saw it move more than 50% ahead.

Other significant gainers included Kefi Minerals plc and Central China Goldfields plc, which both advanced more than 40%.
Australian miner Norseman Gold was the only company to suffer a major loss, falling 12% after reporting a 95% drop in pre-tax profit.