Issue link: http://resourceworld.uberflip.com/i/1012424
A U G U S T / S E P T E M B E R 2 0 1 8 www.resourceworld.com 29 www.puregoldmining.ca PGM:TSX-V Since hitting a peak of US $1,900/oz back in 2011, the price of gold has dropped by a third and has been bouncing between US $1,222.20/oz and US $1,400/oz since 2013. Gold is currently trading around a 12-month low of US $1,250/oz and now analysts are struggling to pinpoint the metal's future direction. Back in May this year, the GFMS metals research team, a unit of Thomson Reuters, predicted gold would average US $1,360/ oz in 2018, up 8% from 2017, with some short-term moves towards US $1,500/oz resulting from uncertainty around USA politics, ongoing Middle East tensions and Brexit negotiations. They also expected the Chinese central bank to resume pur- chases leading to a rise in net official sector demand this year to more than 400 tonnes for the first time since 2015; however, jewelry fabrication in East Asia, which includes number one consumer China, fell for a fourth year in a row to its weak- est in five years, with a drop in Chinese fabrication accounting for the bulk of the drop. Overall, China's gold demand was down 3% in 2017 and Chinese consump- tion was expected to weaken further this year according to GFMS, citing structural changes in the jewelry industry which have seen retailers focus on higher-margin products. Mine production edged lower last year for the first time since 2008, totalling 3,247 tonnes but GFMS said it expected mine output to hit a record 3,265 tonnes in 2018. Many analysts agree that the metal is oversold and is due for a rebound and are puzzled as to why such a safe-haven asset is failing to attract investors at such a low price and amid the unstable geopolitical environment. Gold 2018, published in May by the World Gold Council, brought together industry-leading experts from across the globe to analyze how the gold market was set to evolve in the next 30 years. Key insights from this included: • The expanding middle class in China and India, combined with broader economic growth, will have a significant impact on gold demand. • Use of gold across energy, healthcare and technology is changing rapidly. Gold's position as a material of choice is expected to continue and evolve over the coming decades. • Mobile apps for gold investment, which allow individuals to buy, sell, invest and gift gold will develop rapidly in India and China. • Environmental, social and governance issues will play an increasing role in re- shaping mining production methods. • The gold mining industry will have to grapple with the challenge of producing similar levels of gold over the next 30 years to match the volume it has historically delivered. n GOLD Gold Outlook by Ron Hall