Researcher Predicts Price of Gold Will Rise Steadily

Gold will reach the $400 level by 2000-2001, in line with rising production costs, according to a leading Australian researcher.

AME Mineral Economics, in its annual gold survey, forecasts the gold price will shadow production costs and will rise steadily from this year until the beginning of next century.

“This trend in the marginal cost of future gold mine production implies a rising trend,” the study said. “From an average of around $360 an ounce in 1997 to $380 an ounce in 1998.” That’s been the trend since 1982, when movements in world gold stocks virtually ceased to affect the gold price.

In the last 15 months, the spot gold price has fallen 17%. On Friday, gold closed down $1.10 to $344.65.

“Movements in existing world gold stocks seem to have had virtually no influence on the gold price, which appears to track gold mining costs consistently,” the study said.

New mines and mine expansions will add 200 metric tons of gold to total world mine capacity by the end of 1998, the study said, with South America the biggest contributor to expanding production.