As good as gold? 2010 Global Gold Price Report
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10 Ianuarie 2011 |
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PRICEWATERHOUSECOOPERS in ROMANIA |
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Strada Barbu Văcărescu, Nr. 301-311
Cladirea Clădirea Lakeview
020276 Bucureşti, Sector 2
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+40-21-225 3000
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+40-21-225 3600
Website
www.pwc.com/ro
Annually, PwC surveys gold mining companies from around the world. We spoke with executives at 44 companies, asking them questions varying from when do you think the price of gold will peak, to, what gold price are you applying to your reserves in 2010?
This year we took an even deeper look into the gold sector, noting trends around the relationship between the price of gold and M&A activity, hedging strategies, the investment market's increased attractiveness toward junior mines involved in gold, struggling global currencies and countries' increased interest in gold. As the price of gold seeks to challenge its high in 1980, the gold sector is in the midst of an exciting period of time. What will your company do to capitalize on the price of gold?
When the world says jump, gold asks how high
Yes, gold prices are on the rise. But just how high will they go? In our survey, respondents were asked to identify when gold would peak and at what price. The majority of respondents predicted that gold prices will continue to increase until Q4 2011. In terms of price, responses ranged from $1,400 to $3,000, but 40% of respondents believe the price of gold will peak around $1,500. Needless to say, 73% of respondents expect the price of gold to continue to increase in the next 12 months.
While we get excited at the prospect of increasing gold prices, they are still far below the inflation adjusted high in 1980. Bloomberg published in September 2010, that gold would have to reach $2,435/oz to surpass the inflation adjusted peak price in 1980.
What did your company or other companies do right in 1980 to capitalize on the peak price of gold? In what areas did they fail to optimize potential? How can you take these lessons learned and create value for your company now, as gold inches closer to its peak price in 1980?
One area of similarity to note between now and the 1980s is the correlation between the rising price of gold and the increase in M&A activity in the mining sector. Currently, our Deals team is seeing a surge in M&A activity in the mining sector, and the 1980s were no different. The deals market was not as developed in the 1980s as it is today, but relatively speaking, the 80s were good years for deals in the mining sector. If you haven’t already, you may want to look into what benefits would exist if your company were to engage in M&A activity while the price of gold continues to surge.
