The Gold Report: Gold has traded this year in a range close to $1,200 per ounce ($1,200/oz). Do you expect gold to maintain this range for the rest of the year?
Geordie Mark: Yes. Our 2015 outlook is $1,250/oz, and thereafter we project a flat outlook to manifest a more agnostic view on the commodity. We employ this approach as it facilitates greater correlation between cash flow expectations and our view of operational performance.
TGR: What are the factors keeping gold at $1,200/oz?
GM: We see gold demand support predominantly arising from Asia, particularly in India and China, but also note recent rhetoric from Russia outlining the potential of increasing the country’s metal inventory.
TGR: When we spoke last year, you said you anticipated a gold-silver price ratio of 60. Today, the ratio is 70. What’s your forecast for the price of silver for the second half of 2015, and what’s your forecast for the ratio?
“Asanko Gold Inc.’s gold mine is on schedule for its first pour in February 2016.“
GM: Our silver forecast is $18/oz, which translates to a ratio of about 70. Silver’s supply/demand fundamentals are somewhat different than gold’s, as much silver is derived as a byproduct from base metal production. Even so, we are seeing ever-increasing supplies of silver moving into various investor-oriented vehicles. For example we have seen the silver balances within exchange-traded funds (ETFs) hold more support compared to gold ETFs in recent years. The evolving supply-demand picture for silver shows that this metal is becoming more and more like gold in that its demand is increasingly reliant on investor participation.
TGR: Is gold production sustainable at $1,200/oz, and, if so, for how long?
GM: Gold production costs have come down over the last couple of years, due to mine optimization, lower …read more