GFMS predicts new gold highs in 2010, but closure is looming for Zimbabwe gold miner

Gold consultancy GFMS says that the gold price is likely rise above 2009's record of $1 226/oz this year, and could climb to $1 300/oz if the global economic recovery proves sufficiently sluggish. Read on page 12 of this edition of Mining Weekly, however, of GFMS also cautioning that that the big role investment demand is playing leaves the gold market vulnerable to a major correction if and when investors start looking elsewhere.

World investment demand doubled year-on-year to 1 820 t. GFMS says that investors have been buying gold as a hedge against inflation in the expectation that the gold price will continue to rise. For the first time in 30 years, 2009 experienced more demand from investors than from jewellery buyers. GFMS expects an increased flow of new money into the gold market from insurance companies, pension funds and sovereign wealth funds, which could push the price above $1 300 in the second half of the year.

Gold mine production rose 6% to 2 553 t in 2009, after three consecutive years of decline. GFMS says that mine output may rise again marginally this year, but is likely to decline again in 2011. To listen to an audio clip in which GFMS chairperson Philip Klapwijk comments on vulnerability in the gold market, go to www.miningweekly.com and click on to ‘Multimedia' and then on 'Audio Clips'.

Despite the positive price outlook for gold, the London Aim-listed Central Africa Gold (CAG) says that it may be forced to sell its subsidiary gold-mining company Falcon Gold because of factors that include the continuing failure of the Reserve Bank of Zimbabwe to honour payments for gold deliveries to its vaults. Read on page 16 of this edition of Mining Weekly that, despite the buoyant gold price and the setting up of an inclusive government in Zimbabwe, the Zimbabwean mining industry is yet to emerge from the crisis that has run down the country's economy since 2000.

Take note of Creamer Media's growing number of multimedia offerings at www.miningweekly.com, followed by clicking on ‘Multimedia' and then on ‘Video Clips'. The latest video features new Simmer & Jack Mines (Simmers) chairperson Vusi Khanyile on the separation of Simmers from First Uranium, in which it has a 34% shareholding.