Erica deVry, Big4.com Staff Reporter
According to the annual Gold Price Survey by PricewaterhouseCoopers (PwC), the average price of gold remained around US$959 in 2009. Gold prices were fluctuating between US$812 and US$1200 per ounce till early December. The prices have risen in spite of the recession which has affected almost all industries while gold saw an average which was higher than US$1000 from October 2009 onwards.
Till 2008, more than 44% respondents replied that they will not have any change in their production plans due to the quick change in gold prices. However after looking at the rising prices during the current year, their plans have changed. A quarter of the companies who have participated in the survey have expressed their desire to increase their long term production levels and over ninety per cent of these companies feel that gold prices will rise even further in the next year.
“Gold price assumptions have been increasing steadily over the last few years, with the most significant increases occurring in 2009. In fact, just over half of the companies (58%) plan to use the same prices over time (2008: 69%). But, of those planning to use variable prices over time, the average prices reported trend strongly downwards over the longer term.” says Bob Bosshard, a partner with PwC Canada’s mining practice.
The survey states how most companies use various methods to determine the price estimates. When estimating gold prices the primary factors which are considered are, current price (45%), analysts’ trends (38%), and historic price (16%). However dependability of these estimates is a major concern. The good news is that most companies are optimistic about financing this year. Nearly 83% companies were confident that securing finance would not be that difficult as compared to 89% of respondents last year who stated that securing finance would be difficult due to prevailing credit crunch at that time.
This survey was conducted with 58 participants who are at leading gold mining companies. It included looking into the issues which influenced their choices. PwC is present in over 151 countries across the globe and provides industry-focused assurance, tax and advisory services.