Gold supply declining, BlackRock manager says

Jan 10, 2014 @ 8:06 am

BlackRock Inc.'s Evy Hambro, manager of its $8 billion World Mining Fund, said gold supply may fall “quite rapidly” as producers curb output at expensive mines.

“Very few gold companies are actually making significant profit,” Mr. Hambro said. “If this trend of better management of these assets continues, supply will start to decline quite rapidly.”

Producers are cutting costs and focusing on profitable mines after prices for the metal slid 28% last year, the biggest annual drop since 1981. Barrick Gold Corp., the largest by sales, sold three of its Australian mines last year and chief executive Jamie Sokalsky says it's in talks to offload more assets. Harmony Gold Mining Co. said it would lower expenses, partly by reducing equipment and exploration spending.

The industry must follow the example of diversified mining companies in cutting costs and allocating spending, Mr. Hambro said.

“The gold companies, and the management teams there, were the worst offenders in terms of value destruction,” he said. “They ticked every single box on what not to do. The lessons they could learn from the industrial players are quite real.”

The 30-member Philadelphia Stock Exchange Gold and Silver Index fell 49% last year as the U.S. economy improved and some investors lost faith in the metal as a store of value.

(Bloomberg News)

0
Comments

What do you think?

View comments

Recommended for you

Featured video

INTV

Former CIA director John Brennan on the importance of contingency planning for financial advisers

Speaking from the floor of the MarketCounsel Summit in Miami, the ex-CIA director makes a strong case for why financial advisers need to have a plan for managing through a disaster.

Video Spotlight

Help Clients Be Prepared, Not Surprised

Sponsored by Prudential

Recommended Video

Path to growth

Latest news & opinion

Broker, retirement groups make last-minute pleas to change tax legislation

Pass-through provisions are target of groups representing employee-model brokerage firms, as well as retirement plan advisers.

House and Senate reach tentative compromise for tax overhaul

Lawmakers still need to get a cost analysis of their agreement, so it's not yet definite, according to a source.

Advisers' biggest fears for 2018

What keeps advisers up at night.

One adviser's story of losing his son to the opioid epidemic

John W. Brower, president and CEO of JW Brower & Associates, shares the story behind his son's death from a heroin overdose and how it inspired him to help others break the cycle of addiction.

Tax reform will boost food, chemicals, rail stocks. Technology? Not so much

Conagra and Berkshire Hathaway are two stocks that should benefit most from changes in the tax code.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print