Wednesday, March 23, 2011

Gold Fields CEO Says Break Above $1,500 This Year "Possible"

The chief executive, Nick Holland, said that positive supply-demand fundamentals continue to indicate a positive outlook for the metal this year.
"Could it break through $1,500 (an ounce)? I don't know, but it's possible," he said, when asked what the price of gold might do this year....

But Holland said the general commodities rally was also exerting pressure on mining costs and factors such as rising oil prices were hitting the bottom line of miners.

"Although gold might be at $1,420 an ounce today, the industry is not making a huge amount of money and the South African industry in particular," he said.
Again, the cost squeeze is cutting into the rising profits that would be expected from gold shooting up.

His caginess and caution doesn't mean that Gold Fields will hedge its production. He also said that hedging is too risky over the long term. He also said that higher input costs have raised the total cost of production for some miners to $1,000/oz.

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