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Goldcorp CEO visits Australia and predicts 'peak gold' next year

Section: Daily Dispatches

But can there ever be 'peak paper'?

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The Bullion Price Will Rise to Meet 'Peak' Gold Next Year

By Barry FitzGerald
The Australian, Sydney
Friday, October 10, 2014

MELBOURNE, Australia -- Canada's Goldcorp, the world's biggest gold producer by market value, has renewed its prediction that "peak" gold will arrive next year, setting the scene for the bullion price to rise significantly over the next five to 10 years.

And it expects competition for gold resources will eventually force it out of its "comfort zone" of operating only in North and South America, with Australia's status as a major mining destination making it part of the new location considerations.

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Goldcorp president and chief executive Chuck Jeannes told the Melbourne Mining Club yesterday that from next year there would be a steady reduction in global mine supply, due in part to the rate of new discoveries falling dramatically since peaking at 175 million ounces in 1995.

He said while investment demand for gold had been hit with the flight to equities in the past two years, China's cultural affinity for the precious metal, the rising wealth of its population, and the need for asset diversification away from the US dollar meant the supply/demand fundamentals were "very strong" with the coming of peak gold.

But on the near-term price outlook, Mr Jeannes said he expected a "fairly narrow band for the rest of this year, and possibly in to, and even through, 2015."

"So I doubt we will go much below $US1,150-$US1,200 (an ounce). Also I don't think we will go much above $US1,350 maybe $US1,400. It largely depends on when the US Fed does whatever they are going to do."

His comments were preceded by a sharp jump in the gold price after the US Federal Reserve indicated a rise in interest rates was unlikely in the near term.

Mr Jeannes said once rates were set loose, the pricing of gold would focus more on the supply and demand fundamentals.

Goldcorp's $US20 billion ($22 billion) market capitalisation is three times that of Australia's biggest listed producer, the poorly performed Newcrest, and it is often mentioned as a potential suitor, particularly if Newcrest's new CEO, Sandeep Biswas, stumbles with its recovery plan.

After his speech, Mr Jeannes emphasised that his flying visit to Melbourne was to speak at the MMC and nothing else. While he knows Mr Biswas, he did not trek down St Kilda Road for a more formal catch-up.

Asked if acquiring assets in Australia could be part of Goldcorp's expansion outside of North and South America, Mr Jeannes said the company looked at assets all around the world.

"As the world's largest company by market cap, at some point we will need to expand out of the Americas and compete for assets worldwide," he said.

"We just haven't found anything yet compelling enough to take us out of our comfort zone. Australia is an attractive jurisdiction. We just have to find some attractive deposits here."

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