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South Africa: Demand Drives Gold
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Business Day (Johannesburg)
COLUMN
6 May 2008
Posted to the web 6 May 2008
Johannesburg
SOUTH African gold companies jumped yesterday on the back of the obvious.
Finally, all factors in the matrix of issues that give the local players headaches are gravitating in their favour , the main ones being a lower rand and a higher gold price. But the extraneous issues are also moving toward normality; electricity is more or less back, at least for the time being, and most of the administrative issues with the mineral and energy affairs department are historic or ongoing rather than looming.
As a result, the upcoming gold quarterlies seem likely to herald some positive news for a change. Even Harmony might show a profit. But here is the real good news. The price jump of the yellow metal seems to have taken place on the back of, wait for it, strong physical buying. Indian buyers have apparently been in the market over the past week, chequebooks in hand. No longer is the prospect of global economic doom and gloom pushing the price. Actual, physical demand is the driver, or at least part of the driver.
Now, if South African gold mines can manage to keep their fatality rates more or less under control, the industry might actually feel it has the wind at its back once again.
The Bottom Line is Edited By Edward West
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