Geologists, brokers fight for gold

THE Australian Geoscientist Skills and Employment Network and CIBC Eyres Reed chairman David Reed have joined forces to fight for the survival of the gold industry.

At a recent AGSEAN meeting Mr Reed said the industry was in desperate straits and something had to be done to address the problem.

One initiative brought before Federal Government was the flow-through share scheme.

This scheme has operated successfully in Canada since 1981.

Mr Reed said the scheme worked by passing tax deductions on to the investor from the company.

He said many other investments were tax deductible to the shareholder so there should be no reason why the

mining exploration industry could not benefit in the same way.

Mr Reed said the government was slow to act, being focused on tax changes while putting other issues on the back-burner.

The government did not realise “crisis legislation” was needed for the mining industry, he said.

Mr Reed said the urgency of the issue was also lost because of the current strength of the gold price.

Hartley Poynton personal adviser Conlie Salvemini said it would be unwise to gamble on exploration

companies in the current climate.

He said junior companies were fine providing they were profitably run.

“You will start to see takeovers so a lot of junior stocks will either merge or be taken over,” Mr Salvemini said.

Hartley Poynton suggests gold stocks should comprise at least 2 per cent of an investor’s portfolio.

Mr Reed predicted that in January or February there would be a flood of money on to international equity markets around the world, particularly from fund managers holding out to see the effects of the Y2K bug.

All that was needed was a slight change in sentiment and the gold sector would boom again, he said.

However, Mr Reed said there were a number of hurdles stopping the gold sector from reaching its potential.

He said it would be hard to compete with the current craze for internet-based companies.

Mr Reed said people were just buying off the screen with little or no interest in what the company did.

It was also difficult for stockbrokers to advise clients because there was little knowledge of how profitable those companies would be.

Mr Reed said, after two or three years, most internet companies would still have nothing and produce nothing.

He considered Native Title was the next issue to address to make explorers more certain about their future.

Another concern needing attention was the lack of education in society about the benefits mining brings to Australia.

Mr Reed said the negative perception of the community towards mining because of environmental concerns was crazy and needed to be addressed by politicians.

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