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Thursday, December 07, 2006

They May Be Biased But DAMN, They're Bullish...

Business Week has an interesting story on the outlook on gold from leaders in the mining industry...

Buoyed by high prices, demand from Asia and a weak U.S. dollar, the gold industry has flourished since prices bottomed out in 2000 and probably is only halfway through the current boom, a leading industry official said Wednesday.

"Overall, our market is strong and will remain strong for some time to come," said Ronald Stewart, senior vice president for exploration for Canada-based Kinross Gold Corp., the eighth-largest gold producing company in the world.

Some other factoids from this incredibly bullish article (mostly attributed to Stewart)...

* Since 1800, the industry's average boom and bust cycles have averaged about 10 years -- the last downward trend lasting 14 years from 1986-2000.
* From 2000-06, there have been almost $40 billion in consolidation transactions involving gold alone, he said. This year, it's close to $16 billion.
* The industry is spending $7.1 billion a year on exploration, up from about $2.6 billion a few years ago. About half of that exploration is for gold, 30 percent for copper and other base metals and about 20 percent for other minerals, such as diamonds and uranium.
* Inflation is taking its bite with overall costs up about 25 percent, including a 25 percent increase in the price of steel and energy costs about 40 percent higher.
* China has only 1.5 percent of its reserves in gold bullion, compared with most of Europe which has about 15 percent in gold reserves.If China were to raise its gold reserves to the 15 percent level, it would have to purchase 8,000 tons of gold.

To read the whole thing, CLICK HERE.

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