Gold to emerge winner in 2009

January 12, 2009

Commodity Online
NEW DELHI: With the meltdown leaving investors clueless on where to put their money, the metal sector may witness some gains.

This is the result of people learning some lessons from the global economic crisis.

Still it is also important to note that not all metal prices move in tandem. Even among base metals during the boom, nickel, copper, zinc and aluminium each reached their peaks at separate times.

In 2008, commodities like iron ore, coal and manganese proved better performers than nickel and zinc.

However, demand for metals will be down in 2009 as every country is hit by the meltdown.

The rising cost of fuel, labour and equipment because of the high prices for other metals meant the gold sector put in a weak showing.

But there is hope that gold will perform better this year.

Global gold sector is performing relatively well now. A sign to that effect was visible when goldminers increased exploration and production while other miners shut operations.

Gold price reached highs of more than $1,000 last year but has traded in a range of $700 to $900 an ounce in the past few months.

After the collapse of Lehman Brothers, gold defied expectations by not proceeding to rise tremendously.

Sino Gold’s early entry into China has given it a strong base in that nation. It expects to produce 210,000 to 230,000 ounces of gold at a cash operating cost of less than $400 an ounce from two mines this year, and has other growth projects under way.

While the political situation in Thailand may be too risky for some investors, Kingsgate Consolidated may be a solid performer over the medium term after it was granted its long-awaited mining leases for its Chatree North extension last July.

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