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Gold to be April talking point

Expect to hear bucketloads about gold in the coming weeks, some of it true, some not, as the Australian Gold Conference kicks off at Burswood on April 19, followed by two days of spruiking by gold company executives at a follow-up event.

Theme of the first day will be sustainability, a word the mining industry has adopted as its own in what is one of the world’s more bizarre exercises in propaganda.

A secondary theme will be the terrific price performance of gold over the past year and the fabulous investment outlook as the world continues to dump paper currencies in favour of gold – and at this point Briefcase is not sure which is the bigger lie, sustainability or investment performance

On sustainability, talks will be on topics such as moving to a sustainable future, with entire sessions dedicated to "financing a sustainable future" and "sustainability on the ground."

Mining leaders, in a remarkable display of unanimity, claim to have a complete belief in mining actually being a sustainable industry. Critics are routinely monstered for daring to point out that the miners (in a metaphorical sense) have no clothes – for most mining chaps to appear naked would almost certainly trigger a raid by the cops.

But, in the humble view of Briefcase the mining industry is stark, staring, naked on the question of sustainability and to argue otherwise is stark, staring, bonkers simply because a mine, just in case no-one has noticed, is an ever deepening hole in the ground – and what was once there ain’t coming back.

It is at this point that the propagandists take over. Ahh, they say. We are arguing that after the hole, we move to another hole, and make good the hole we left, providing jobs, and leaving behind a beautiful, if slightly altered environment.

Time will judge the mining industry’s campaign to sell itself as sustainable and the verdict is likely to be very harsh because to argue a lie (and to even appear to believe it) is a very dangerous thing. Far better to stick to an economic benefits argument which is absolutely true with no-one able to argue that mining is not good for an economy, especially Australia’s.

On the question of investment performance it is much easier to show that gold, while having done well (when measured in that much-hated US paper currency) is actually nothing special. In the 12 months from the end of March 2003 to March 31 this year, the price of gold rose by 26.3 per cent from $US335 an ounce to $US423. What the gold bugs don’t tell you is that the price of copper rose by 94.6 per cent over the same period ($US1,576 a tonne to $US3,067), nickel was up 74.8 per cent ($US7,940 a tonne to $US13,885) and even that dear old heavyweight, lead, was up by 88.4 per cent ($US440 a tonne to $US829).

So much for gold as a wise place to invest over the past year. Even BHP Billiton shares outperformed gold, up by 35 per cent, plus the payment of dividends on the way through.

For Australians the gold picture is actually a lot bleaker, and Briefcase does not propose to debate the question of currency movements, just points out that the Aussie dollar rose in the March to March period from US60 cents to US75 cents which reduces the rise in the gold price to a minuscule 1 per cent (up from $A558 an ounce to $A564).

Now that we’ve cleared the air on the big picture about gold, let’s have a look at days two and three of gold week. This is when it might be truly unwise to visit Burswood with a cheque book because the spruikers are on the loose. Dangerous chaps as they are, at least everyone knows where they’re coming from – flogging the story (and the shares) of their companies and honest enough to admit what they do – dig holes, flog the metals and make a pile. Even Briefcase relates to that.

They might even care to argue that shares are actually a better way to make money from gold rather than investing in a lump of metal which stays in a bank vault or burns a hole in your home filing cabinet. Some gold shares have done fabulously well in recent months. A1 Minerals, a new float, is up from 24 cents on its December 5 listing day to 65 cents, a 170 per cent gain over four months. De Grey Mining is up 570 per cent March-on-March, rising from 10 cents to 67 cents.

Setting aside the pros and cons of gold v other metals or gold shares, some of the papers at the share spruiking part of the three day talkfest have the potential to be interesting and may even make it worthwhile paying the $825 registration fee.

People who attract the eye of Briefcase are Keith Yates who has a story to tell about Adelaide Resources and its South Australian gold search, John Williams can tell the A1 story, Ian Chalmers who should be able to reveal more about Alkane’s mine development plans in New South Wales, and Mark Ashley, who will hopefully be able to lift the non-existent profile of LionOre. Anyone seriously interested in the share spruiking days can get more details at www.paydirtsgoldconference.com.

 "A cynic is not merely one who reads bitter lessons from the past, he is one who is prematurely disappointed in the future." Sydney Harris.

 

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