Gold’s dimming supply prospects have caught the eye of one billionaire.
“For the first time in my life, I bought gold because it is a good hedge,” Sam Zell, the founder of Equity Group Investments, said in a Bloomberg TV interview. “Supply is shrinking and that is going to have a positive impact on the price.”
Spending on new mines began to dry up after prices of the metal tumbled from a record in 2011, clouding the outlook for production. With gold still down by almost a third from its peak, the biggest miners are just looking at buying their competitors in a bid to bolster their output pipeline.
“The amount of capital being put into new gold mines is a most nonexistent,” Zell said. “All of the money is being used to buy up rivals.”
The combined gold reserves still buried in mines — an indicator of production prospects– shrank by more than 40 percent in 2017, from its peak after companies cut spending on exploration and development of new projects, according to Bloomberg Intelligence data on big producers.
(By Luzi Ann Javier)