Your position relative to a storm's track can mean the difference between safety and susceptibility. Gold miner Kinross Gold
Forecasts for gold abound, and most of them hinge upon analysis of the macroeconomic landscape like the prospects for inflation or challenges facing the U.S. dollar. If you've followed my own Foolish coverage of the sector, then those considerations will be quite familiar. With the world's attention focused upon factors driving the demand for gold, it seems that few are discussing the supply side of the equation.
At a gold conference in Denver earlier this month, Kinross CEO Tye Burt presented his own forecast based upon a dwindling supply of physical gold in the industry's long-term pipeline, avowing:
We may be in the midst of a perfect storm in terms of price and industry dynamics ... Globally production has been in decline since the peak of 81 million ounces in 2001 to 77 million ounces last year, and we see that decline continuing long term.
I know this will come as a surprise to many. I have encountered widespread assumptions that the nine-year bull market for gold must be driving significantly higher production volumes worldwide. This is not the case. Although increasing demand for gold is plainly visible in China's clandestine accumulation and the explosive growth of holdings reported by the SPDR Gold Shares
The trend of massive South African deposits nearing the mature stage of their productive cycle is illustrated by miners like AngloGold Ashanti
To prepare for the perfect storm, Kinross and major competitors like Barrick Gold
That's not enough to change the global supply shortfall, but it might be enough to make Kinross a reasonable choice to weather the storm.
Although second-quarter earnings were ravaged by currency fluctuations -- which affected rival Goldcorp