Mining Survey: Gold to Peak at $2,000 in 2012
With gold testing its psychological safe haven pull on investors, gold miners around the world remain confident its lackluster price will perk up and hit a new record within 2012.
In a survey by PricewaterhouseCoopers LLP (PwC) for its annual Gold Price Report, 80 per cent of mining companies said gold prices will increase in 2012 and hit a pinnacle of $2,000 per ounce within the year.
Amid topsy-turvy prices, 62 per cent of respondents said prices continue to benefit their stock price, but admitted it was less than expected. Gold prices often parallel stock prices.
Gold prices this year through Dec. 15 have risen 11 per cent, but gold stocks within the S&P/TSX Global Gold Index have fallen 10.6 per cent, PwC said in a news release.
"One main driver behind this unprecedented disparity between the price of gold and gold stocks is the availability of alternative investments that investors can use to generate a return from higher gold prices," John Gravelle, PwC Canadian mining leader, said.
"One example for retail investors is the ETF, which provides investors who want exposure to gold with a simple alternative to buying gold stocks. Such investments do not give the investor risks associated with cost overruns and resource nationalism."
To attract more investors as well as gratify those who continue to invest in their companies rather than alternative gold investments like ETFs, many gold miners have begun giving or increasing dividend payouts, the report said. As of November, dividend payments for the top 20 gold mining companies rose 44 per cent from 2010. In 2010, dividends soared only 18 per cent from 2009.
The report noted the disparity between gold prices and gold stocks have also pushed some companies to rethink how to use their higher cash flows. About 29 per cent expect to spend cash on acquisitions in 2012, a hike of 19 per cent in 2011.
To date, there have been 544 gold acquisitions with an approximate value of $11.2 billion, the report said. As of the end of November, the volume of mining acquisitions grew 12.6 per cent and the value fell 38.4 per cent from a year ago.
Some 29 per cent said they will spend their cash on acquisitions in 2012 while 40 per cent mull replacing reserves through acquisitions.
"It's evident that acquisitions remain on the minds of gold mining executives for 2012," Gravelle said.
"Cash-fat, acquisition-hungry companies are in the driver's seat, as they are able to launch takeovers of smaller exploration-based companies that are not certain when the current market malaise will lift," Gravelle explained. "Such juniors may be more motivated to accept takeovers given their current challenges in raising capital."
An earlier a poll of 20 hedge fund managers, economists and traders said the precious gold will decline further below $1,500 per ounce over the next three months. Majority forecast the bullion will sink as low as $1,450 per ounce in the first quarter of 2012, while three respondents predict it will fall deeper into $1,400 per ounce.
Read more:
Gold Recovers, Sparkles Above $US1600 1st Time This Week
Is the End of the Bull-run Near? Prices of Gold May Hit Rock Bottom in Q1