Newmont president predicts new surge in gold price
THE gold price was set to soar as high as $US450 per ounce in the next 12 months, Newmont Mining Ltd president Pierre Lassonde said today.
Key to the rising gold price was the unsustainable $US550 billion United States' trade deficit, Mr Lassonde told the Diggers and Dealers mining conference in Kalgoorlie.
The only way to reachieve balance was to have the US dollar continue to depreciate against a range of other currencies, he said.
"Therefore the gold price will continue to go up in US dollar terms, and our view is that in the next 12 months you're going to see it up to $US450," Mr Lassonde said.
At last year's Diggers & Dealers conference, Mr Lassonde predicted the gold price would rise to its current levels of around $US350 an ounce.
He said today that recent signs of a US recovery were politically induced would not last beyond the next US election.
"For the next 12 months it will seem things are OK in the US but can't be sustained."
The low US dollar was good for Newmont's business because 70 per cent of its mines operations worked in US dollars, he said.
The industry as a whole was not benefitting from the weaker dollar, but needed only a small rise in gold price to improve, he said.
"The gold industry to make a decent rate of return probably needs a closer to $US360 gold price to make a 10-12 per cent rate of return.
"While Newmont is doing very well on an industry basis another $US10 to $US12 would bring the industry about where it should be."
Companies that could not make a decent return at those prices should not be in the business, he said.
Mr Lassonde said dehedging also played a part in increasing the gold price.
"For every 100 tonnes that is dehedged you're looking at something like a $US5 increase in the gold price," he said.
Newmont had led the charge in dehedging, and would have reduced to nothing within 18 months Normandy's 10 million ounce hedgebook.
Newmont has 22 operations around the world mostly in Nevada, Peru, Australia and Indonesia.
