PwC’s annual Gold Price Report shows 80% of mining companies expect the price of gold to continue to increase in 2012.
The majority of respondents expect the price per ounce to peak at $2,000 in the coming year. One year ago, the report had predictions of gold hitting $1,500 per ounce in 2011.
The surveyed companies represent 26.5 million ounces of gold mined in 2011 and 37.75 million ounces to be mined in 2012.
Sixty-two per cent of respondents said that, although the price of gold was positively affecting their stock prices, the effects were not as high as anticipated. The price of gold has risen 11% through December 15, while S&P/TSX Global Gold Index stocks declined 10.6%.
John Gravelle, PwC’s Canadian mining industry leader, describes this as an “unprecedented disparity” and said it’s due in large part to the availability of alternative investments that can be used to generate returns from higher gold prices, such as EFTs.
This disparity is affecting how executives are spending their increased cash flows; 27% are paying dividends in 2011, compared with 9% in 2010.
In addition, 29% of executives anticipate spending cash on acquisitions in 2012, compared with 19% in 2011.
Emma Crawford