If mining companies are to maintain their vitality and provide increased value for their investors, ore reserves must be continuously replaced at a rate greater than they are depleted by mining. Put bluntly, we will have to find much more, particularly gold and platinum.
Fortunately, since 1983, more than $2 billion(US) has been raised for mineral exploration in Canada, largely for gold because of its relatively strong price. Most of the world’s outcropping gold deposits have probably already been discovered, so future exploration will be largely confined to deep deposits, a more expensive game, and this points to a tightening world gold supply and higher gold prices.
Meanwhile, continuing improvements in output methods and various technological advances should help to lower mining costs over time, offset somewhat by the exhaustion of certain high grade deposits and the necessity of using more lower grade, high cost orebodies and by the continuing steady decline in the huge South African output. Rising production
By the end of 1988, many new Canadian gold mines will have come on stream since 1986, with up to 60 more deposits slated for development in the near future. Mine output of gold in the United States rose sensationally from 30 tonnes in 1980 to 155 tonnes in 1987. Canada went from 50 tonnes to 120 tonnes in the same period and should increase further. Nevertheless, despite this improved output, here is a sobering, incontrovertible fact: total non- communist world mined gold output in 1986 (1,291 tons) showed virtually no growth from 20 years before (1,285 tons), but world consumption in fabrication has soared from 943 tons in 1980 to 1,590 tons in 1987.
The excess of total supplies over consumption was bought up enthusiastically by investors in North America, western Europe and particularly Pacific Rim countries, mainly Japan, Taiwan and Hong Kong.
The Japanese yen price, for example, is quite low because of the weakened U.S. dollar. The people of little Taiwan, with only twice Ontario’s population, squirrel away at least 93 tons per year costing about $1.1 billion, equivalent to up to half the amount of gold that 245 million much wealthier Americans purchase for investment each year. The western Pacific Rim countries are likely to continue as a strong gold and platinum destination, which is bullish for the price. Long term trend
If you look at a gold-price chart going back to 1780, you will see that a line drawn from 1933 to 1970 and then extended into the future reaches a level of $390 per oz in the third quarter of 1988 (the current range). This long term trend shows an 18-fold advance in 55 years; that is, a dollar invested in gold in 1933 would now be worth $18.
As I said last month, $350 is still a good price for gold for most mining companies. Consolidated Gold Fields’ average 1987 cash cost is $227 and some companies have a lower figure. That historical trend line would bring the price to an optimum of $900 by mid-1995, but even half that advance would give us $650; a pessimistic quarter would still be $525.
Gold in the long term maintains its purchasing power. For example, the value of an ounce of gold bought a good business suit during the tenure of U.S. President Washington (1789-97), Canadian Prime Minister John A. Macdonald (1867-73), President Lincoln (1861-65), Prime Minister Mackenzie King (1935-48) and President F. Roosevelt (1933-45), as it still does today under Prime Minister Brian Mulroney and President Ronald Reagan, after that 200 years. Gold protected the purchasing power of your family in the long run, if you had trust in it.
The recent price fall in gold and oil carries a major negative, because it temporarily forces the United Soviet Socialist Republic to put more gold into the Western market. However, factors that will push gold up are the relentless creeping inflation throughout the world and the continuing anxiety level in many countries.
The gold price partly depends on the level of fear in the world. (North Americans have the least fear.) For the moment, much has subsided following peace efforts in Iraq and Iran, Angola, Afghanistan etc., but other complex and disturbing world problems still simmer and some will worsen.
Gold’s attraction as a store of value and a safe haven for wealth will certainly not diminish. It never has in the long run. Much stronger gold prices can be expected again and mining will gather in the benefits at the higher levels.003 T. P. (Tom) Mohide, a former president of the Winnipeg Commodity Exchange, served as a director of mining resources with the Ontario Ministry of Natural Resources prior to his retirement in 1986.
To whom it may concern,
As you can see my name is Gretta Willans (my married name).
Could you please send me more details of this case, maybe the episode number of the tv programme Unsolved Mysteries and/or wether this case has been solved.
Your help would be most appreciated.
Gretta Willans