re: 504.30 over 510 tonight? /stolwyk Gold feels the pinchBy...

re: 504.30 over 510 tonight? /stolwyk
Gold feels the pinch
By Cortlan Bennett
04-12-2005
From: The Sunday Telegraph


AUSTRALIANS are missing out on an investment gold mine as prices for the precious metal nudge 20-year highs.
Despite passing the psychological $US500 per ounce mark last week, gold has become the "poor cousin" of iron ore and other commodities as exploration levels in Australia slide to alarming lows.

While exploration investment in all other metals rose dramatically over the past 12 months, fuelled by record prices and demand, gold fell one per cent.

In just four years, Australia has slipped from being the world's biggest gold explorer to its fifth largest, behind Latin America, Canada, Africa and the rest of the world (not including the US and Asia-Pacific).

"There's no doubt that gold is being impacted at the moment by the boom in prices in other (commodities)," said Australian Gold Council chief executive Michael O'Neill.

"Gold has been a bit of a poor cousin to other commodities for a couple of years now. We are no longer competitive in global exploration investment.

"We are benefiting from discoveries made in past decades, but without exploration and new discoveries the industry will definitely stagnate."

Mr O'Neill said many Australian gold explorers had decided to move offshore in recent years as local costs increased and most of the "easy gold" had already been found.

"But with the price going up, it's going to make more sense for that exploration to come back to Australia," he said.

"What we now need to do is explore deeper.

"To do that we need to have better geoscience data. When you think gold is worth $6 billion to $7 billion to the Australian economy annually, it's still quite a significant contributor.

"India - at this point the highest-demand area for gold - is experiencing growth, as well as the Middle East and China. Economic uncertainty is also driving people to include gold in their investment portfolios."

Stock Analysis managing director Peter Strachan said that with gold taking the battering it had received over recent years, consolidation had led to a dearth of new exploration.

"Australia's gold and exploration sector through the '90s was decimated by large overseas companies - Barrack, Prosser, Anglo American - coming in and buying up what was a very dynamic and active local exploration sector," he said.

"The big companies were more interested in improving their production and cutting costs than really spending as much money on exploration.

"When previously we had 20 gold exploration companies, there was a lot of money being spent. But they got caught up in mergers and acquisitions.

"The low gold price didn't encourage exploration, either. The other factor is the uncertainty that native title legislation has created. Native title makes it very difficult for explorers to get on to the land they want to explore."

Mineral Securities executive chairman Keith Liddell agreed.

"In Australia, the focus has been more on nickel and iron ore and exploration of other minerals (rather) than gold," he said.

"Australia is fairly well picked over (for gold), apart from some of the more remote places.

"There are still native title issues in some places, especially those more remote areas."

Mr Liddell, whose company owns Tianshan Goldfields Ltd, one of the biggest explorers in China, said he expected Australian exploration to rise next year.

"The supply and demand dynamics of gold have changed quite fundamentally over the past 12 months, especially as we're now starting to see some reserve banks talk about buying gold instead of selling it," he said.

"There have also been strong sales of jewellery."