For the past 2 years the price of gold has sunk from its all time high of $1,900/oz. to around $1,200 late last summer. The price of gold closed at $1,319/oz. last week. What would the impact on higher gold prices be for the northern economy ?
Last year China purchased the world’s entire gold production, yet the price remained well below its high. Financial markets have reacted to the Fed’s recent move to taper (reduce its purchases of long term securities) from $85B to $65B per month. The $US has weakened, as have emerging market currencies. The $Cdn has fallen sharply this year, in spite of the federal government being close to balancing its books.
The weak precious metals markets in the past two years has made it extremely difficult for junior mining companies to raise capital. The gold price is important since a higher prices makes the economics of mining projects more attractive and reduces the risk for investors. Here are some northern gold projects that depend on an attractive gold price:
The price of gold is very important to the northern economy. Continued strength in gold prices will lead to mines being put into production and the economic benefits associated with such activity.