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Market Vectors Gold Miners ETF Message Board

  • threepercentyield10year threepercentyield10year Feb 6, 2014 2:26 AM Flag

    "Credit Suisse estimates gold could hit $1,000 per ounce"

    This past week Barrick Gold (NYSE: ABX ) recalculated its reserves assuming gold at $1,100 per ounce, well below the $1,500-per-ounce level it used last year, but is one ratings agency Moody's has endorsed (global financial institution Credit Suisse estimates gold could hit $1,000 per ounce). Newmont, however, set its reserve pricing at $1,300 per ounce, down only $100 from last year's $1,400 per ounce price, but it's using a $1,400 level for resource assumptions (down from $1,600 in 2013).

    The miner justifies the higher rate because it says $1,100 per ounce is just not sustainable. Although for planning purposes it actually uses a $1,200 price, if it saw gold tumbling below that threshold for a sustained period it has backup plans for its growth capital expenditures. Even so, at the levels it's using, it still necessitates a review of its dividend policy, which it will update this month when it reports earnings. Newmont cut its dividend 18% last year as the price of gold fell, and we saw a number of miners slash their payout, including Barrick, which hacked it down by 75%, and Newcrest Mining, which suspended it altogether.

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