“As good as gold” still holds true

Despite current market conditions, the Pricewaterhouse-Coopers Global Gold Price Survey says: “While other commodities and the economy have trended down, gold has held its value and is serving its purpose as a hedge of wealth in uncertain times.”

The Survey, based on a poll of 45 of the leading gold mining companies in North America, Australia, and South Africa, found that gold averaged over US$800 last year. There was a significant intra-period volatility in the gold price over the year ranging between US$712 and peaking at US$905 in September. In early December, when the survey was conducted, prices retreated somewhat to US$764.

Of the companies surveyed, 62% have determined the gold price assumptions that will be applied to on-going reserve determinations and carrying values at December 31, 2008. The average price indicated by respondents is US$734 for reserves and US$751 for carrying values (2007; US$575 for reserves and US$640 for carrying values).

According to the survey, most companies (69%) plan to use the same prices over time. Of those planning to use variable prices over time (20%), the average prices reported are trending downwards in the long term — US$787 in 2010 and US$732 in the long term.

Despite the market and commodity price volatility during the past year, most companies reported no expected changes to their long-term production level; one third of those surveyed indicated that their production levels would increase in 2008 to 33.34 million oz. versus 2007 production of 34.63 million oz.