Current Live World Spot Prices
Last update: Sat 21st May 2022 06:59 (Melbourne)
Gold: $2,623.12 AUD     $1,846.67 USD Silver: $30.90 AUD     $21.75 USD

Losing Gold Market Remains Highly Profitable for Australians

In April 2020, came under new management, articles published before this time, such as the below, may not reflect the views or opinions of the current team.

While international markets keep losing value when it comes the yellow market, this doesn’t represent a huge problem for the production industry in Australia. Even with the falling prices, the profits for Australian producers are massive.

In fact, gold production reported big increases during September quarter according to Surbiton Associates, a Melbourne consultant company that conducted a production survey. This means that the sector continues to grow, even when the rally is slowing down and reporting a US$100-plus dive.

The Growth in Numbers

According to Surbiton Associates’ survey, the output for September quarter reached 75 tons, which represent over $3.83 billion when estimated at last Friday’s spot price for gold. This production output represents a slight but significant increase from June quarter when the output reached 74 tons.

What is more interesting is that the production expanded against the odds, because many mining regions were affected by heavy rainfall on the east side of the country. “It was a good performance given the wet weather that took its toll on some of the gold producers in NSW, Victoria, and South Australia,” said Dr. Sandra Close, director at Surbiton Associates.

Related stocks could experience gains during the followings weeks, stimulated by the good results showed by this survey. But the growth isn’t the most interesting thing about Dr. Close’s insights.

Australian Profitability

While the gold price in U.S. Dollar has been falling during recent weeks, Australian producers are enjoying huge margins due to the actual exchange. “Overall, local producers have continued to take advantage of the higher Australian dollar gold prices that have prevailed for much of 2016,” said Dr. Close regarding how good is this industry doing with the actual conditions.

We can read that “the Australian dollar price of $1589 an ounce also continues to provide fat margins for much of Australia’s gold output” in The Australian’s article where the survey from Surbiton Associates was highlighted.

This means the slowing rally keeps generating massive profits to gold mining and producers companies in Australia, which is something investors should look for, along with gold buyers alike. These stocks have the capability to experience gains even with falling gold prices; something that isn’t common.

Gold Is Expanding

With production on the rise, oversupplying is a threat on the horizon. If the worldwide industry falls in this mistake, it can plunge prices drastically, leading to big losses and making investors to look away for a while when it comes to the yellow metal.

Australia, which is one of the leading countries by production, should maintain a steady, minimum growth without exaggerating and oversupplying. While the expansion for September quarter was only about a ton, we must consider the heavy rainfalls in the region, slowing down operations.

Without rainfalls, the Australian producers could reach an even higher growth during the past quarter. This means that they aren’t having an oversupply situation on their account. A scenario like this one can make worse the losses, increasing the supply beyond the limited demand.

Leave a Reply

Your email address will not be published.