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Gold would fall back to $1,000 an ounce any time soon, said Global Hunter Securities, LLC (GHS) in a research note.

31 Jan 2013

NEW YORK (Commodity Online): Gold would fall back to $1,000 an ounce any time soon, said Global Hunter Securities, LLC (GHS) in a research note.

According to GH Securities, the mining industry has seen rampant cost inflation over the last decade and further cost inflation is anticipated.

When gold was $300-$400 an ounce in the 1990s, the average cost of mining was less than $300 an ounce, allowing gold to remain economically viable. In today's gold industry, the average all-in cost of exploration, financial analysis, construction, mining and refining is most likely at or above $1,000 per ounce,” the firm added.

“The rampant cost inflation across the industry has been for a variety of reasons, including: labor inflation, input cost inflation, higher construction costs, material price increases, etc. As a result, we continue to believe the floor for the price of gold in today's mining industry is in the $1,200-$1,400 per ounce range and that if gold were to decline toward these levels, there would be a significant slowdown in new gold mine construction and lower exploration expense by companies helping to support the gold price from a supply-side basis,” Global Hunter concluded.


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