THE fundamentals of the gold market clearly supported a higher price, this year and in the future, according to Newmont chairman and CEO Ronald Cambre.
The basis of his argument is that record consumption in 1999 was seven per cent above the previous record in 1997.
“The strong economy in the United States and improving economies in Asia point to a further increase in 2000,” Mr Cambre said.
“For the past decade, gold demand has exceeded world mine production.
“The shortfall has been met by government central banks as they have sold off a portion of their monetary reserves or, increasingly, lent gold to the market.
“Analysts estimate that official sector sales and lending doubled in 1999 to 28 million ounces of gold, or almost one-quarter of total world consumption. While this amounted to only a small portion of official sector holdings, it fuelled fears that all central bank gold was for sale.
“Profiting from this negative sentiment, speculators and bullion dealers drove the gold price down by nearly $40 an ounce from March to September 1999,” Mr Cambre said.
To stabilise the market and restore confidence in the metal, 15 European central banks that collectively hold nearly half of all official gold, announced in September that they would limit future gold sales to 13 million ounces a year for the next five years and cap lending at its then existing level.
Importantly, the accord includes all previously announced bank sales and is supported by the US Treasury and other entities controlling another 35 per cent of world gold reserves.
