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JOHANNESBURG (miningweekly.com) – There will be more investment demand for gold in 2010, says Gold Fields CEO Nick Holland.
His view is that 2009 saw only the start of investment demand for gold and that the world would see more in the current year.
"There'll be continued growth of new funds looking to have a piece of gold," he tells Mining Weekly Online.
It will be the continuing investment demand for gold that will be the main thesis behind the improving gold price, he adds.
Jewellery demand will not be the solution to the gold price rising, "I think we have to make peace with that".
Investment demand, he points out, is currently only 0,8% of the total funds under management to gold.
While some say that the exchange-traded funds (ETFs) have run hard now and that they are going to be sold off, the reality is that for every one person wanting to sell an ETF, there are two or three people wanting to buy one.
Even if gold investment demand rose from 0,8% of the total funds under management to 1,2%, a huge amount of gold would be absorbed.
"I would like to believe that we have a reasonable underpin where we are and that the gold price can go higher from here," he adds.
Primary supply of gold, in his view, is going to continue to decline on the back of a dearth of exploration projects and a dearth of exploration dollars over ten years that is now starting to manifest itself.
Also, mining cash costs are rising as quality deposits are replaced with low-quality deposits.
"All of this augurs well for the gold price," Holland says.
Also, central banks are buying, not selling. "So, net, I think it's positive."
