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Gold to scale new peaks as mining costs grow

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Jan Harvey and Anna Stablum
Reuters
Wednesday, Aug 27, 2008

Gold prices are likely to scale new peaks as market fundamentals tighten because producers need at least a 20 percent rise in bullion prices just to make new investment viable, a leading fund manager said on Wednesday.

“Gold mining is a very complicated and expensive business and you really need to see the gold price a lot higher before you see any increase in gold production,” Ian Henderson, who manages around $5 billion at JP Morgan’s Global Natural Resources fund, told Reuters.

“(Gold) should have a sustained price level of over $1,200 an ounce before we see any significant new mine build,” he said.

(Article continues below)

His concerns over miners’ margins echoed those of Gold Fields chief executive Nick Holland, who told Mining Weekly the company would need to see a gold price of $2,000 an ounce to replace its infrastructure.

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This article was posted: Wednesday, August 27, 2008 at 11:04 am





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