Easing prices and investment in mine expansion projects will moderately grow revenue.
New York, NY (PRWEB) May 23, 2014
Although in 2011, the United States production of mined gold and silver ore reached its lowest point in 20 years, the Gold and Silver Ore Mining industry still recorded its second-highest revenue gains in more than a decade. This contradiction reflects the influence that metal prices, which are traded on world financial markets, have on the industry's performance. In the five years to 2014, industry revenue is expected to climb at an annualized rate of 3.3%, while gold prices rise at an annualized rate of 4.5%, by the end of the period. “Investors seeking stable investments after the recent economic downturn have driven growth and global demand,” according to IBISWorld Industry Analyst Antal Neville. In 2014, however, revenue is expected to drop 15.0% to $9.7 billion as prices decline due to slowly waning uncertainty regarding the European debt crisis. As advanced economies recover from the recession, investors will diversify investments, injecting cash into equities and bonds at the expense of gold and silver, causing investment demand to grow slowly in 2014.
Meanwhile, demand from jewelry manufacturing, the industry's primary domestic market segment, has declined in recent years as a result of increasing gold prices and falling consumer demand. In fact, jewelry's domestic share of industry revenue has decreased in the past five years. In 2014, however, demand from this downstream industry is anticipated to rebound as a result of expected dips in the prices of gold inputs. “As demand for silver and gold grows domestically and internationally, prices are expected to follow, albeit not as rapidly as after the recession,” says Neville.
Moreover, a lack of investment in exploration and mine development in the 1990s and early 2000s has made it difficult for industry operators to boost production to meet current demand levels. Gold production dropped consistently from 2001 to 2009, but increased in 2010, 2011 and 2012 due to the recent surge in investment. In 2014, US gold production is expected to grow marginally, hindered by falling prices. Additionally, the four largest industry companies, which account for over two-thirds of industry revenue, have invested in mine expansion projects to take advantage of high gold and silver prices. Furthermore, as US economic growth ramps up in the five years to 2019, upward pressure on gold and silver prices will ease.
For more information, visit IBISWorld’s Gold and Silver Ore Mining in the US industry report page.
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IBISWorld industry Report Key Topics
Operators in the Gold and Silver Ore Mining industry mine gold and silver bearing ores. Mining activities include the development of mine sites and the on-site processing of ore into a concentrate or bullion. Companies typically retain ownership of the semi-processed gold or silver products and pay for further refining on a toll-charge basis. The refining process is included as part of the Copper, Zinc and Lead Refining industry (IBISWorld report 33141).
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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