When this missive hits your screen late on Monday morning Western Australian time, your scribe will be sitting back, relaxing, potentially nursing a hangover, and listening to presenters at the Diggers & Dealers forum in Kalgoorlie.
For Diggers & Dealers forum, one should read the Kalgoorlie Gold Conference this year such is the dominance of gold stories on the menu over the three days of the event. Don’t believe me? Well, here is the evidence.
Planning his diary ahead, your scribe decided a little analysis of the program was in order to work out when he could fit in offline meetings – here read identify opportunities for sleep-in versus go straight to the conference from whichever pub owned by Ashok Parekh he found himself in the early hours of Monday, Tuesday and Wednesday.
The news for Strictly Boardroom, and indeed for anyone who is a lover of the yellow metal, is very good (meaning Plan A is to make apologies to other delegates and hit the sack early).
The agenda for the three days reads Gold, Gold and More Gold. Indeed, just over half the talks at the forum are focused on gold – surely a record (at least this millennium)? That means precious little opportunity for sleeping in.
A quick classification of the full 38 presentations making up the D&D program sees 19.5 (51%) on gold; 4 presentations (10.5%) on nickel; 4 stories (10.5%) on iron ore, 3.5 on copper (9%), then two presentations best described as diversified (5%) and similarly two on platinum (5%).
The other category then comprises uranium (1.5 talks), phosphate (1 talk) and vanadium (half a talk) – although expect minerals such as molybdenum and silver to rate a brief mention here and there.
Judgment calls have been used in assigning the presentations to different commodities, however the overarching theme is very clear: Diggers is a gold conference this year.
So what makes gold so bright right now?
Here are a few quick positive sound bytes on the economic and financial aspects of gold’s outlook from the hip (and before Kalgoorlie Ale dims the brainwaves).
- The wise money is on strong investment demand continuing for the next 12 months. After all, which global paper currency would you choose to invest in right now? Global currencies better resemble an “ugly contest” rather than beauty contest given the 2009 stretching of national balance sheets.
- Any post 2010 decline in gold fundamentals will be slow and limited as economies in the Eurozone, Japan and the United States inch back to growth.
- Gold’s store of wealth in addition to commodity role globally is not forgotten. Gold has proven a safer haven than the bank vaults and exotic paper derivatives of Wall Street.
- Money is in plentiful supply; it’s being printed the world over. Historically, periods of high money supply growth have been accompanied by periods of sustained high inflation – so global economic recovery will not dampen gold’s role as a store of wealth and may actually enhance it.
- The US dollar’s role as the predominant global currency won’t change anytime soon. However, steps at the margin suggest governments are hedging their bets on the US dollar and seeking to settle selected transactions through local currencies (notably Russia and China who have been adding to gold reserves). Any diminished role for the US dollar augers well for future gold prices.
No comment is tendered from here (at least as yet) on gold’s supply-side. With so much of the Diggers & Dealers program dedicated to gold, the task to hand there is to sit back, to relax – and most critically, to listen very carefully.
Good hunting.
Allan Trench is Adjunct Professor of Mine Management & Mineral Economics, Western Australian School of Mines and a Non-Executive Director of several resources sector companies. He is the Perth representative for CRU Strategies, the consulting division of independent metals & mining advisory CRU group (allan.trench@crugroup.com).
