Gold price reacts to US interest rate hike • Mining boosted by Barrick/Randgold merger • Guinea: the next mining mecca? • Investor consortium aims for gold standard
The Royal Mint’s Chris Howard looks back at what the week has held for precious metals.
Two major news stories have dominated the world of gold this week.
First, the precious metal price’s changing reaction ahead of the federal interest rate rise in the US, and second the announcement of the Barrick-Randgold merger, which has brought fresh hope to the industry.
We take a look at this golden union, as well as potential growth in Guinea’s mining sector and a new initiative that aims to promote best practices within the industry.
Mining boosted by Barrick/Randgold merger
Barrick Gold’s merger with Randgold Resources has shaken the mining sector. During a year with few mining projects, the merger consolidates Barrick’s position as the world’s largest gold miner, with some experts noting that mergers and acquisitions appear to be a cheaper option than new exploration projects.
What I found most encouraging was that, following the announcement, shares of rival miners were boosted – a cause for optimism for a rejuvenated industry and increased competition.
Guinea: the next precious metals mecca?
Off to Guinea now, where the mining industry is showing encouraging signs of growth.
The impoverished country’s vast mineral reserves have largely been left untapped and include large gold deposits. Currently, mining constitutes just 15% of the country’s gross domestic product (GDP).
In July, member states of the African Union (AU) appointed Guinea as host of the headquarters of the African Minerals Development Centre, underlining not only its growing reputation in the mining industry throughout Africa, but also the potential for the country to profit from a booming mining industry.
Investor consortium aims for gold standard
Finally, a new consortium of investors predominantly composed of fund managers has been founded. The Shareholders’ Gold Council aims to promote “constructive engagement between the gold mining industry and the investment community”.
It’s always great to see new initiatives that can help to promote best practices within the industry, and this will hopefully result in a shot in the arm for the mining sector.
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