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Australian gold prices reach all-time high amid global uncertainty

20 June 2019

 

Renewed hope for another Australian gold rush might be good for those who happen to strike it rich — but investors say it is also a sign of global uncertainty.The latest ABS data shows mining companies are spending more than ever looking for the rare commodity across Australia, with almost half a billion spent between October and March.

 

Last year, Australia also exported the most gold in its history at 317 tonnes, maintaining its status as the second biggest producer of the element.Western Australia's goldfields are leading the charge, however there has also been increased prospecting in the Northern Territory, where $14m was spent on gold exploration last quarter.Warren Pearce, the chief executive of the Association of Mining and Exploration Companies, says exploration in both WA and the NT has "led to the recovery of the industry" back to 2012 levelsUnlike bonds or stocks, it is seen as a tangible commodity that will not lose its inherent value if markets crash.Mr Pearce speculated that US-China tensions and even Brexit could be some sources of global uncertainty driving investors towards gold at the moment.David Baker from Australian firm Baker Steele Capital — which runs a global gold fund — agrees there could be many sources of instability driving a push back to gold.

 

Central banks buying up gold

Last year, the world's central banks bought up 650 tonnes of gold, their highest amount since the 1970s."Central banks see gold as a hedge against uncertainty in the world," Mr Baker said.

Central Banks buying up in high numbers include Kazakhstan, Russia, Turkey, India and Poland."These countries are very dependent on the US dollar for trade and settling accounts," Mr Baker says.Yet, like many historical moves back towards gold, Mr Baker said it was not easy to pinpoint the exact logic driving investors.He warned the industry not to get too excited by the renewed optimism of Australian gold hunters."Gold is a very rare commodity and it takes a lot of time and expertise to find it," he said."That's why it's a precious metal."Australians are doing all they can and being reasonably successful but it's not an easy game."Industry analyst firm IBISWorld echoed these sentiments, and said a lack of new gold deposit discoveries in the past decade and several mines forecast to close by 2025 presented a challenge for the sector.The firm forecasts Australia's production of gold will fall to 255 tonnes by 2023, pushing it down to be the world's fourth largest producer.The Association of Mining and Exploration Companies' Mr Pearce said he expected new gold deposits to be discovered in the next 18 months as exploration progresses.

 

Source:https://www.abc.net.au/n