Gold News

Gold mining 'a bubble that could pop'

Gold mining companies are in danger of suffering a similar fate to that of the 90s Dotcom companies as they are unable to replenish dwindling supplies and fail to make a profit, one expert has said.

According to Mark Bristow, chief executive of Randgold Resources - a company that has a significant presence in west Africa - more firms are attempting to exploit gold reserves, despite the fact that there is less of it to go around.

"The industry hasn't grown at all in terms of production. It's simply got a larger market capitalisation and fewer profits," he commented in Johannesburg yesterday.

Mr Bristow added that companies should not rely upon the escalating price of gold as an indication of profit, because this fails to take into account the rising cost of labour and extraction.

South Africa is one of the world's largest gold producers, but output has been falling in recent times due to power outages and less gold being present close to the surface.

This has helped to support gold prices as people are encouraged to invest out of a fear of scarcity.

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