Gold prices will fall as the economy recovers, causing revenue to grow slightly through 2017
Los Angeles, CA (PRWEB) February 14, 2012
In 2011, US production of mined gold and silver ore reached its lowest point in almost 20 years, but the US Gold and Silver Ore Mining industry achieved record-high revenue. This apparent contradiction reflects the power precious metal prices, which are traded on world financial markets, have on industry performance. Over the five years to 2012, gold prices and industry revenue are projected to climb at annualized rates of 19.5% and 17.4%, respectively. According to IBISWorld industry analyst Brian Bueno, "The increases have been driven by growing global demand from investors seeking a safe investment after the recent economic downturn." In 2012, revenue is expected to jump an additional 11.8% to $14.8 billion as prices climb due to recessionary conditions in Europe and continued disappointment in the US economic recovery.
On the other hand, demand from jewelry manufacturing, the Gold and Silver Ore Mining industry's primary domestic market segment, has decreased in recent years because of price increases and declining consumer demand. In fact, jewelry's domestic share of industry revenue is currently down 10 percentage points from its level in 2009. Investment demand has grown tremendously, however, especially in the global market where investment demand in gold is almost 40.0%. Says Bueno, “As demand grows domestically and internationally, producers are attempting to boost production to take advantage of high prices."
The six largest gold producing mine sites – Goldstrike, Eastern Nevada Operations, Bingham Canyon, Cortez, Twin Creeks and the Smoky Valley Common Operatio – are operated by the four largest players: Barrick Gold Corporation, Newmont Mining Corporation, Kennecott Utah Copper (Rio Tinto Group) and Kinross Gold Corporation. Concentration has increased in recent years, due to merger activity and increased production at some of the industry's largest mines. The medium-high level of industry concentration reflects the relatively small amount of mineral resource locations, where the largest and highest-volume producing mines are controlled by a few large companies, and multiple firms often operate at the same mine establishments. Additionally, producers have an incentive to merge due to the cost benefits of having larger operations. Large producers also have greater capital availability necessary to invest in mine exploration and development. All these factors give major players an advantage, making it difficult for smaller firms to compete and lead some to consolidation. For more information visit IBISWorld’s Gold and Silver Ore Mining in the US industry page.
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IBISWorld industry Report Key Topics
Firms in this industry mine gold and silver bearing ores. Mining includes the development of mine sites and the on-site processing of ore into a concentrate or bullion. Firms typically retain ownership of the semi-processed gold or silver product and pay for further refining on a toll-charge basis.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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