Strong dollar weakening gold prices
Sydney Morning Herald
Friday November 20, 2009
THE gold producer that takes its name from the patron saint of miners - St Barbara - has blown the whistle on the myth that the Australian industry is enjoying record gold prices because of the surge in US dollar gold prices to all-time highs.Speaking at the group's annual meeting yesterday, the chairman of St Barbara, Colin Wise, noted that in the last 12 months the Australian dollar gold price has gone backwards by 2 per cent while the the US dollar price has risen by 53 per cent.The meeting was also notable for the - non-binding - rejection of the remuneration report, with shareholders unhappy at the $2.1 million paid to Ed Eshuys when he resigned as managing director in March.Like other Australian producers, all of St Barbara's revenue is in Australian dollars. So it remains exposed to the strengthening of the US exchange rate. "There will be a continuing strong drive within St Barbara to better manage costs and improve operating efficiencies," Mr Wise said.While the US dollar gold price rose above $US1150 an ounce on Wednesday, continued strength in the exchange rate left the local price at about $1235 - well short of its all-time high of $1546 on February 20.According to a Melbourne industry consultant, Surbiton Associates, the US dollar price on February 20 was $US989. But the US exchange rate was 63.94 cents compared with the current level of more than 92 cents.A Surbiton director, Sandra Close, said that while the focus had been on the rising US dollar price, investors needed to pay attention to the margin squeeze caused by the higher Australian dollar.
© 2009 Sydney Morning Herald
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