Commodity Online
Is gold being driven up by speculation and not supply-demand factors? According to Henk J Krasenberg, there is shortage of gold already.If the gold sales of the central banks and authorities like the IMF would not have come to the market, we would see a quite other picture of supply and demand. "The gold supporters do not attribute all of the recent buying of gold to speculation stimulated demand but rather to investment buying from investors that recognize the true value of gold as an emerging investment in what I have called "the paper society" that we are living in today," Henk J Krasenberg said in an editorial in his newsletter Mining in Africa (a publication of European Gold Centre)

Is there higher cost pressure on African Gold producers?
International media is rife with news that despite rising gold prices, three largest gold producers of South Africa will face pressure on profits on account of higher costs, lower output and lower US dollar. However, higher costs are faced not only by gold mining companies but just about in any other sector. Yet, there is a difference between the mining companies and all the companies in other industries. Where those other companies have hardly any possibilities to offset their higher costs in the prices of their products, companies in the mining industry have the possibility that the markets will offset their higher costs in time by rising prices. Especially with gold,we should not forget that gold is a scarce commodity and that there is not as much gold as the users of it want, Henk Krasenberg wrote in his newsletter.

South Africa was once the single largest gold producer of the world but has now fallen to fourth position but the South Afrincan gold mining industry is alive and kicking.

Of the three top gold producers, in particular AngloGold Ashanti and Gold Fields have become world entrepreneurs with huge and increasing assets and projects in other African countries and even in other parts of the world. A tendency that is being followed by several other South African resource companies expanding over their borders. They mingle into the flow of all kinds of international mining and exploration companies that have been and are coming to Africa to join the 'new rush' for its commodities.

Also international investors are increasingly coming to Africa in the sense that they are recognizing the potential of Africa-related mining shares and adding them to their portfolios. "In my ongoing research, I come across large institutional investors that are building significant positions in Africa. Are they worried by higher costs, electricity tariff increases and other such things? Maybe, but they prefer to look at the wider and larger perspective of changing currency values, lower outputs translated into upward gold prices and investment opportunities. In the end, the current pressure on profits of the top three South African goldproducers may even be translated into to higher sales proceeds and higher share prices. Not so bad at all!," Henk Krasenberg said.

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