Brief by Central Staff
Mining – May 2004 – Colorado Central Magazine
Some investors are apparently pessimistic about the American economy, because they’ve been putting their money into gold — either by buying the metal itself, or by investing in companies that mine gold.
Such demand, according to the Reuters news service, explains why gold prices were near a 15-year high as we went to press — about $425 an ounce.
As Reuters put it on April 7, “gold … gained more directly as investors fled Wall Street for safe havens on concerns about growing attacks on U.S. forces” in Iraq.
And the Wall Street Journal on March 30 reported that people who had been burned by the long slide in high-tech stocks have been investing in gold, and seeing decent returns — gold was selling for $254 an ounce in 1999.
“The price of gold has gone up because there is a lot of mistrust in the stock market,” according to one investor quoted by the Journal.
Colorado has only one active gold mine these days, the open-pit Cresson near Victor. It produces about 260,000 ounces of gold each year, and higher gold prices mean considerable profit, since its production costs are less than $300 an ounce.
How high would gold have to get before anyone proposed production in Central Colorado? Back in 1980, gold hit $820 an ounce, and there were claim stakes and mining propositions all over the place.
These days, according to a geologist we consulted, the price would have to rise over $500 an ounce, and appear stable for long enough for somebody to go through all the work involved in opening or re-opening a mine. In other words, it’s a risky investment, even if gold is serving as a refuge for people who think other investments are too risky.
