Peak Gold… $1,000 Gold… $2,000 Gold

by BWK ~ March 14, 2008

“We’re Going to Run Out of Gold”

In a wide-ranging interview at the Reuters Global Mining Summit in London, the CEO of Goldcorp Inc. (GG: NYSE) , Kevin McArthur, said that he expects the price of gold to top $1,000 per ounce and stay there for a long time.

McArthur said he thinks the price of gold, currently above $973 per ounce, is “not anywhere near a bubble.” In fact, McArthur said, “We are not replacing the reserves that we’re mining, and yet demand continues to grow worldwide.” Speaking about the global gold industry, and not Goldcorp in particular, McArthur said, “We’re going to run out of gold.”

Gold’s “Perfect Storm”

Not to be outdone, the CEO of Yamana Gold (AUY: NYSE) , Peter Marrone, stated that “There is a good chance we will see [$1,500 per ounce] before the end of this year.”

Gold has been on a tear since the end of 2007. The price increase is due only in part to tight supplies from the world’s gold mines and other gold sources. Gold is rising due to fears of inflation, a weak dollar, record high oil prices and expectations of continuing interest rate cuts in the United States. Marrone said the current environment forms “a perfect storm” for higher gold prices. Gold would have to rise in price to well over $2,000 per ounce in current dollars to match the previous nominal peak of $850, set in 1980.

Until we meet again,

Byron King

Note: Byron King is a frequent contributor to the free e-letter Whiskey & Gunpowder. To receive daily insights into energy, oil, commodities and other natural resources sign up here!

Additional Resources
A Gold Correction?
Market Insight - Fundemental Resource Demand Is There