Bucharest, 19 January 2012. According to PwC's new annual Gold Price Report, 80% of mining companies expect the price of gold to continue to increase this year, with the majority of respondents expecting gold to peak at US$2,000 per ounce in 2012.
Additionally, with 29% of respondents expecting to spend their cash on acquisitions this year and 40% of companies planning to replace reserves through acquisitions, it's evident that acquisitions remain on the minds of gold mining executives for 2012.
"With the volatility we are seeing in the market, not least of which includes the recent downturn in the gold price, those companies sitting on deep pools of cash and with an appetite for acquisition, are in the driver's seat. They are ready and able to swoop on smaller explorers who are more vulnerable to market fluctuations and have difficulty raising capital", stated Alexandru Lupea, Partner, Assurance Services, Energy, Utilities and Mining Industry Service Leader, PwC Romania.
In 2011, there were 544 gold acquisitions with an approximate value of US$11.2 billion. As of 30 November, the volume of acquisitions increased 12.6% and the value decreased 38.4% compared to the same period in 2010. In 2010, 483 acquisitions were completed with an approximate value of US$18.2 billion.
Impact of gold's price
Mining companies are struggling to reap the ultimate benefits of a high gold price - 62% of respondents reported that it was positively impacting their stock price, but the impact was less than expected.
In 2011, gold had risen by some 10%, but gold stocks within the S&P/TSX Global Gold Index had declined 9%.
"One main driver behind this unprecedented disparity between the price of gold and gold stocks is the recent rise in popularity of exchanged traded funds (EFT). Investors now ha
