AngloGold’s gold-market guru, Kelvin Williams, who is also
arguably one of the world’s leading authorities on the
subject, has warned that all gold producers should be concerned
about current declines in physical offtake.
Speaking at the company’s June quarter results presentation
last week, Williams said that, while there was significant
speculative interest in the precious metal, especially in light of
widespread financial, economic and political uncertainty, the
physical market continued to react negatively to the higher dollar
prices.
He was particularly concerned about the fall in costa rican jaw rock crusherconsumption in the
developed world, pointing out that Italian offtake for the first
quarter of 2003 had declined 27% year-on-year. He added that there
were also indications that consumer offtake for gold jewellery in
the US was weak.
This developed-world trend was exaggerated in the developing
markets, particularly in thcrusher for alaska gold minee world’s leading market of India,
where, Williams said, imports had more or less ceased during
May.
He suggested that offtake was unlikely to resume until the
post-monsoon seasonal buying in August.
However, Williams was quick to point out that India had always been
a price-sensitive market and that lcrusher gold mining equipmentower consumption was expected
given the need for that market to adjust buying thresholds to the
new price ranges.
This said, Williams remained positive that there were a number of
factors that would continue to support higher dollar-gold
prices.
A key factor would be movements in the US dollar, with the precious
metal being a major beneficiary of the weaker dollar.
“Expectations of the gold price for the next 12 to 24 months
are tied closely to the fate of the US dollar and, more broadly, of
the US economy.
“As the dollar weakens, so the gold price is expected to
rise.” Other factors will be continued producer dehedging and
speculator sentiments. The former has provided an important
counter-weight to the fall in offtake.
A 430 t reduction in net gold producer hedges during 2002 had been
followed by a further 143 t in the first quarter of 2003.
While AngloGold, itself, would continue to be a gold hedger, it too
was committed to reducing the size of it position.
During the second quarter of 2003, its hedge had fallen another 610
000 oz to 8,73-million ounces and the board, earlier this week,
also revised the current hedging upper limit down from 50% to 30%of
five years of gold production.
Meanwhile, speculator interest, in Williams’s view, remained
a positive feature, with Comex trade patterns showing continued
buying.
“It will be important for gold that Comex continues to
support the price by sustained buying as the economic indicators
continue to favour gold.” Williams said.
However, he warned that, despite all these positives, it would be
crucial, in the medium- to longer-term, for producers to begin
paying serious attention to the issue of offtake, which was
emerging as a serious blot on gold’s copybook.