Gold mining output has little impact on prices: Jeff Nichols

 

This year's gold production is expected to hit a record 3000 tons excluding under-reporting by China and possibly a few other countries.The continuing growth in mine production is in contrast to expectations of many a..

NEW YORK (Commodity Online): 

 Gold mining production has little impact on the prices in the short run and less than generally believed over the long run, according to Jeff Nichols, Precious Metals economist and Managing Director of American Precious Metals.

"The price of one ounce of gold, at any moment in time, is exactly what the marginal investor and consumer of gold is willing to pay for it, ....it is no different from the market valuation of other non-income producing assets-- a work of fine art by Vincent Van Gogh or an irreplaceable antique,"  Jeff Nichols said.

This year's gold production is expected to hit a record 3000 tons excluding under-reporting by China and possibly a few other countries.The continuing growth in mine production is in contrast to expectations of many analysts and investors who expect lower prices to impact production.

Jeff Nichols said that despite lower gold prices over the past couple of years, it would take many more years of low prices and disappointing profitability (even losses) at some mines before gold mine supply can decline.

Increased capital spending by the mining industry – in particular, a number of large-scale mining projects undertaken during the decade-long stretch of rising prices – has begun contributing to primary supply and will be an important source of supply for years to come, Jeff Nichols added.