Gold and stock prices of producing gold companies continue to hover near or below historic lows. The exploration industry and associated service sector are hurting in mining towns across Canada. Operating mines soon will run out of reserves because normal exploration expenditures have not been maintained over the past four years. Once this happens, the economic stability of the North will collapse. The federal government still has not provided assistance to the junior exploration sector concerning revisions to flow-through share regulations.
As operators, we have managed to reduce operating costs while real prices for metal commodities have continued to fall over the past two decades. It is now time for the largest players in the gold industry to take some meaningful action.
To stabilize and increase the price of gold, major producers must adjust their production quotas. Simply put, it comes down to supply and demand. If supply is reduced, prices will move upward. Importantly, share prices also will move up. Why bring new production on stream when the industry is hurting?
This writer challenges the CEOs of various large gold producers to curtail unnecessary production. This decision would be good for their respective shareholders and the industry at large. As professionals, you would have to be considered negligent to continue to sell gold at unrealistically low prices.
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