Oh no, not again -- Mining industry leaders urge another jewelry promotion

Section:

4:43p ET Friday, May 7, 2004

Dear Friend of GATA and Gold:

Sorry to bum you out on another horrible day of another
horrible week, but the appended Reuters report about
the gold conference in Peru shows that we're still up
against not only the world financial establishment but
also the mining industry itself.

Here we have two industry leaders proclaiming that
the industry's goal should be to spur jewelry demand
for gold, even as it has been acknowledged that the
World Gold Council's recent jewelry promotion was
an expensive failure and even as it is acknowledged
in the appended report that jewelry demand for gold
inevitably declines as the gold price rises, as the
price indeed has been rising over the last few years
-- the last month or so excepted.

What sort of demand for gold might RISE with a
rising price, and thereby offset the decline in
jewelry demand?

Investment and monetary demand, of course.

But there seems to have been no discussion at the
conference about promoting investment and monetary
demand for gold. There seems to be little discussion
of that anywhere in the mining industry.

This is the sort of thing that prompts wonder whether
the financial authorities have intimidated the mining
industry into slow-motion suicide.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

* * *

Big Gold Miners Urge Jewelry Marketing Blitz

By Fiona Ortiz
Reuters
Friday, May 7, 2004

http://www.reuters.com/newsArticle.jhtml?type=topNews&storyID=5077984

LIMA, Peru -- Flagging world demand for gold jewelry
-- due in part to high prices for the precious metal --
has alarmed the world's top two gold miners, who on
Friday called for a global marketing blitz to promote
gold.

Gold production from mines doubled between 1980 and
2000 before flattening out, but demand for gold from
jewelry makers -- who consume 80 percent of global
gold production -- has dropped between 20 percent and
30 percent over the last five years, industry experts
estimate.

Jewelry production is price-sensitive and gold hit a
15-year high of $430.50 per ounce in January before
slumping to $378.75.

"This gets embarrassing. The amount spent on marketing
is minuscule. The mining industry needs to seriously look
at this and do more to promote gold," Wayne Murdy,
chief executive of leading world bullion producer
Denver-based Newmont Mining Co., told an industry
conference in Peru, comparing huge diamond and
platinum marketing expenditure with that of gold.

Gurdy said the World Gold Council industry body had
recently restructured and would focus more on promoting
partnerships between miners and jewelers and on branding.

"Many miners don't think they have customers. They think
the customer is the security van that takes bullion away at
the refinery gates," said Bobby Godsell, chief executive of
No. 2 world producer, South Africa's AngloGold Ashanti
Ltd.

"In this company we intend to find ways to reinvigorate
gold jewelry," Godsell said.

He said AngloGold was investing in a company that will
manufacture jewelry in South Africa for export to the
United States, and was studying the development of a
jewelry brand.

"The Italian jewelry manufacturing industry is in deep
trouble and is our most important customer," he said.
Jewelry manufacturing in Italy has declined as fabrication
centers have moved to Turkey.

Bruce Alway, analyst with London-based Gold Fields
Minerals Services (GFMS), said in a presentation in
Lima earlier in the week that that one reason been a
shift in consumer taste to other types of jewelry, such
as diamonds set in silver.

Godsell said that at a time when the entire world is
basing hopes on China for growth in demand for their
industries, gold jewelry consumption in China has
slumped.

He said the two main gold jewelry consuming countries
in the world, India and the United States, also had seen
falling demand for gold jewelry, but for different reasons.

In India buying of gold jewelry as a saving device to
guard against inflation had dropped off due to high
prices. In the United States gold has lost market share
in the face of aggressive marketing by platinum and
diamond manufacturers.

Murdy said Newmont was not spending directly on
gold marketing but would participate in industry-wide
efforts to promote gold jewelry through dues of $1.75
per ounce of production paid to the World Gold Council.

Gianni Nichele, chief executive of Italian gold
manufacturer Silmar Group, told Reuters that gold
miners and jewelry makers needed to cut out the
middle men the way he is doing in a venture he is
starting up to produce gold chains in Peru, in which
he is buying directly from a local mine and selling
directly to retailers in the United States.

For its part Peru, the sixth biggest gold producer in the
world but a tiny gold jewelry manufacturer, aims to
double gold jewelry output over the next five years to
add value to its exports.

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