Steep Gold Price Increases Ahead: Gold Exploration Company Chairman Foresees $2000 per ounce
Friday, Dec 19, 2008
Many experts believe that this is a longer-term rally, which is quite young.
Robert McEwen, chairman and chief executive of a Canada-based gold mining company is very bullish on the future outlook for gold. “I expect it to test $850 by the end of 2008, and by the end of 2010, north of $2,000, possibly $5,000,” McEwen stated in a recent interview. Strong gold and commodity prices are spurring investment in the search for new deposits by many mining companies across the world. His company is currently exploring for gold on mineral lands in central Nevada and expects to spend about $50 million to develop the site over the coming years.
Gold is seen as a profitable opportunity by many investors, having risen over 50% during the last two years, from $430 per ounce in May of 2005 to its current spot price of around $660. While McEwen’s price projection is considerably above the current spot gold price, he is not the only industry executive who web design software steeply increasing prices in the near future. The former CEO of a large well known US based gold mining company, Pierre Lassonde, believes gold will reach $750 by Christmas of this year. In spite of the price increases in the past several years, actual production of newly mined gold from most nations continues to decline, as costs rise at existing mines.
In spite of the fact that gold prices have been rising toward their May 2006 peak of $725, they have failed to break above the $700 mark this year, and are still seen as consolidating after the sharp run-up in prices last year. selling of the gold reserves of certain European nations, most notably Spain, is seen as depressing prices in recent weeks. Silver prices have also remained strong.
Many experts believe that although demand from jewelry makers will likely drop off as gold prices rise, it is likely to be more than made up for by increased purchases from investors who are seeking a liquid investment alternative to the dollar. Investment in gold and silver for both large and small investors has been made considerably easier in recent years with the creation of Exchange Traded Funds – funds whose assets are gold or silver held in storage. That expected increase in investment coupled with the declining value of the dollar, rising costs to mine gold and the geopolitical risks around the globe, should tighten the supply and demand picture for the precious metal providing the driving force to move prices upward in the coming years.