Global gold mine production probably peaked last year and could start sliding by 2004 unless bullion prices rally, prompting miners to pump money into new projects, according to analysts. Richard Davis, portfolio manager of Natural Resources Team at Merrill Lynch Investment Managers, said exploration budgets plunged 40 percent in the late '90s from their zenith in '96 as gold prices languished near 20-year lows. Bullion has since revived, supported by greater investment demand and unwinding of producer hedge-books, but not enough to bolster budgets, he said. "At current levels, gold prices are too low to encourage sustainable, profitable investment in grass-roots exploration," Davis told the Nikkei Gold Conference in Tokyo. "Given the log lead-time between finding an ounce of gold and getting it out of the ground, the downward trend in gold production is unlikely to be reversed for some time."
NSTL
