Re: SBM....St. Barbara Mines
Your estimates on SBM's worth could be undervalued, Chicken.
Gold could hit $US725 on China demand
By Xiao Yu and Matt Chambers
August 9, 2005
China's growing demand for gold jewellery will drive up global prices of the metal in the next five years.
Prices may reach $US725 an ounce by 2010 from the current level of $US437 and China may overtake India as the world's largest consumer of gold jewellery, said Graham Birch of Merrill Lynch in London. Five other analysts and traders surveyed by Bloomberg said Chinese demand would bolster prices.
Jewellery demand in China, the world's fastest-growing major economy, rose 13 per cent in the first quarter and investment demand rose 36 per cent, according to the World Gold Council, a producer-funded group. Chinese incomes in urban areas rose 9.5 per cent in the first half and are forecast to surge further by the end of the decade.
"It's possible that we'll see a significant increase in demand for gold jewellery [in China]," said Darren Heathcote, head of trading at NM Rothschild & Sons in Sydney. "Rising incomes and government plans to boost domestic spending" may expand sales, he said in an email.
AdvertisementGold prices need to climb 5 per cent more to match a 16-year high of $US456.89 reached in December. Higher prices may buoy shares of Newmont and AngloGold, the two biggest goldminers. Newmont's stock has increased 4.4 per cent in the past week and AngloGold shares have risen 13 per cent so far this year.
Buying gold also protects investors against a decline in the US dollar. The metal's price usually rises as the dollar falls.
China's consumption of gold and jewellery will keep growing quickly as the economy expands and living standards rise, the Ministry of Commerce said in a report this month. The country's 1000 leading gold, silver and jewellery companies increased retail sales by 14 per cent in the first half.
"This trend is likely to continue in the medium term," said Tim Spencer, analyst with GFMS, a London research company.
China's 1.3 billion consumers are already the world's biggest users of steel, cement, copper, tin and iron ore.
An increasing number of young city women are spending more on gold jewellery from luxury brands as incomes rise. They prefer white gold, which has a silvery color and is 75 per cent pure.
Rebecca Wang, a bank clerk at HSBC Holdings in Beijing, prefers white gold to other metals such as platinum because it is cheaper and trendier. "I love it. It looks stylish and sophisticated," said Wang, who bought herself earrings and a necklace for her 29th birthday this year. "I used to think gold was dull and old-fashioned. Now I find the colour and designs attractive."
A gradual revaluation of the Chinese yuan after the country loosened the peg to the dollar last month may also increase jewellery consumption by making gold imports cheaper. "The purchasing power of the Chinese for dollar-denominated commodities has clearly gone up," said George Albino, senior analyst at Orion Securities in Toronto.
Chinese retail sales of gold jewellery rose more than 11 per cent to 224 tonnes in 2004, said GFMS. Sales might rise to as much as 600 tonnes within five years, said Merrill Lynch's Graham Birch, leading China to surpass India as the biggest consumer.
Bloomberg