Bullish new gold prediction $1000 an ounce and beyond

Vice Chairman of Newmont Mining Corporation, Pierre Lassonde was rewarded with the coveted Geoff Stokes Memorial Award at Diggers & Dealers. His keynote speech to 1,700 delegates included a forecast that the gold price was heading to $US1,000 an ounce and beyond.

KALGOORLIE - 

Any gold producers still holding hedge books, particularly if they are more than four years old, are holding a losing proposition as the utilisation of such a financial tool has been a seriously negative function for at least three years with the progressive rise in the gold price.

That was one point made by Newmont's Pierre Lassonde to Mineweb at the opening of Diggers & Dealers Forum in Kalgoorlie yesterday - the largest mining conference by an Australian country mile.

Newmont's negative financial performance just reported was in part due to the global gold mining giant closing out the balance of its hedge book.

He saw the US's appalling current account deficit (now representing 6% of gross domestic product) as pushing the $US down and helping create a "Tsunami of liquidity around the world."

Lassonde gave a six point forecast to delegates:

• The bull market for minerals will last for at least another 20 years, and while the drivers of China and India may have soft moments, they will be an ongoing force for minerals and metals demand.
• The US dollar will plunge through the massive current account deficit though the size of the country's economy was unlikely to create a recession in the next few years.
• The Canadian dollar will like reach parity and beyond with the $US while the Australian dollar will make further inroads on the Greenback.
• Copper and molybdenum are two metals that may experience a weakness, though oil, gold, platinum and nickel will maintain strength.
• Since the 1990s the Dow Jones Average marker has had a fluctuating tussle with the gold price including a nadir for the metal in 1996 when the Dow was 28 times greater. The two were now moving into balance and could see gold move to a 2:1 status in the foreseeable future.
• The gold price could reach $US750/oz by the end of this year and $US850/oz in the following 12 months.

Lassonde sees the gold price moving towards "three zeros and a figure in front" and he was not sure whether that figure in front would be a one or what?

Asked by Mineweb what the diversification of a big investment in Shore Gold Ltd - developer of a big diamond project in Saskatchewan -- was all about, Lassonde said it looked like a great investment and at this stage Newmont retained that view.

Launched at Diggers & Dealers also was a new report by gold industry researcher, Melbourne-based Surbiton Associates, which said the total amount of gold held by the world's four major gold exchange traded funds (ETFs) rose to record levels last week. This was despite the sell-off in world equity markets and lower commodity prices.

This, Surbiton's Dr Sandra Close said, suggests investors' interest in gold remains strong.

During last week total gold held by the four ETFs rose by a net 10 tonnes to a record 628t (20 M oz) worth about $US13.5 M.

"The first ETF was launched in Australia in early 2003 and was followed by similar funds in the United Kingdom, South Africa and the US," Dr Close said.

A gold ETF is a fund which uses investors' money to buy physical gold. The fund issues shardes, each of which is backed by a defined amount of gold, usually around one-tenth of a troy ounce.

In his speech, Lassonde said that the World Gold Council under his guidance had developed an ETF that represented 90% of that market and had become ranked as the 11^th largest Central Bank.

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