Record Gold Prices Spark Gold Rush in Australia

By: EW News Desk Team   Date: 30 August 2011

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EW News Desk Team

Always on the look out for the latest news to monitor the state of the world economy.

EconomyWatch, News Desk Team

 

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30 August 2011

Australia’s gold production climbed by 9.8 percent in the last fiscal year, as soaring gold prices drove the introduction of new gold mines and the revival of previously discontinued operations.

According to a report by Melbourne-based research house Surbiton Associates, gold production in Australia rose by 24 metric tons to 270 tons in the year ending June 30 2011, despite interruptions from severe weather during the first half of the year.

An 18 percent rise in global gold prices in the 2010/11 year – reaching a record of around US$1,500 an ounce – proved to be a key driving force for the growth, said Surbiton analyst Sandra Close.

"The recent spike in the gold price has certainly drawn attention to the industry but it is the sustained, longer-term, upward trend...that has prompted companies to re-evaluate older deposits and also explore for new ones," said Close, as quoted by MarketWatch.

And with gold prices continuing to rise globally – it hit a record US$1,900 an ounce last week – the quest for more gold is expected to continue in Australia.

"The recent strength and volatility in the gold price is not surprising. Rarely have I seen so many long-term factors favouring gold," said Close. "I can't see the economic and political instability around the world being solved quickly."
 

Australia is the second largest producer of gold in the world behind China. While the recent strength of the Australian dollar has taken an edge off those prices for local producers, the Australian gold industry still managed to deliver profit margins of more than $1000 per ounce to many local producers.

"Certainly on the demand side, there is huge demand for gold, particularly from India and China, which a always positive markets for gold,” said Close.

According to the Wall Street Journal, there are now more than 6,000 part-time or full-time gold prospectors in Western Australia alone. In the first six months of this year, the Department of Mines and Petroleum granted 1,721 miner's rights to small-scale prospectors. These small-scale prospectors seem to have already caused competition to rise among other prospectors and major mining companies in the region.

"As more and more people go after the same bit of dirt, it becomes harder and harder to find these things," said Nigel Moffatt, manager of the Perth Mint, the state's only gold refinery.


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