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Thursday, 5th October 2006 (4163 views)

The supply of gold has been fundamentally stunted by ageing mines, according to Barrick Gold.

One of the world's largest gold producers in the world, Toronto-based Barrick also has mines in America, Australia and Africa, but chief executive officer Gregory Wilkins has announced that supply is now notably restricted.

According to Bloomberg, Mr Wilkins pointed out during a speech in Melbourne that this necessarily has an impact upon the price of gold.

"The rate of decline may increase given the age of the producing mines, costs and challenges to new developments. Simple economics says a decreasing or flat gold supply means good news for the gold price," he said.

Mr Wilkins also claimed that world mine output fell by 1.5 per cent during the first six months of the year, although global output during the course of the year is still set to remain fairly stable.

But despite the generally positive impact that ageing mines are having upon the price of gold, Mr Wilkins has told Reuters that movements in the US dollar have meant the industry has seen very little stability of late.

Spot gold prices reached $730 an ounce in mat – the highest price for 26 years – but had fallen to $566.60 on October 5th, Reuters reports.

Mr Wilkins refuted claims that the price of crude oil was a major dictating factor, insisting that "it is really going to be more how the US dollar trades as a driver of investment interest in gold".

 

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