Missing the 'boom'

Gold exports earning NZ$600 mln per year, but no growth nor recent benefit from high prices

19th Sep 12, 5:20pm by David Chaston

A 'higher gold price' is not resulting in NZ miners increasing their output.

The quarterly balance of payments data releases give us a look at the value and volumes of gold being exported from New Zealand.

Annually, New Zealand exports a little over eight tonnes per year in gold bullion, earning some NZ$600 million.

The fast-rising price of gold in US dollars in 2012 has not translated into a bonanza however. That US dollar price rise reflects a devaluation in the greenback which means the price of the NZ dollar has risen as well. Miners are only gaining a small price rise in local currency.

Gold started the year at US$1,574.50 per oz, rising to US$1,598.50 by June 30, and stands at US$1,769.00 today. That's a rise of 12.3% so far this year.

In NZ$ dollars however, gold started 2012 at NZ$2,024 per oz, was NZ$1,997 at June 30, and is NZ$2,139 today. That's a rise of only 5.7% so far this year.

The big NZ$ price gains seen in 2008 are not present at this time, although those earlier price rises are holding.

Miners are continuing operations, but little new production has come on stream in 2012. Production exported in the June 2012 quarter was 2.033 tonnes, recovering from the unusually low 1.7 tonnes in Q1. Q2 exports were at a similar level to their range over the past three years.

These charts tell the long-term story.

Precious metals

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Source: Kitco

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3 Comments

by Kunst | 19th Sep 12, 6:01pm 1348034496

Time for a NZ$ gold currency.

On Friday US$ 1’800.- and end of month US$ 2’000.- with the prospect up to US$ 5’000.- by end of 2012.

Time to introduce a NZ$ gold currency – stabilising the NZ$ - which is certainly important for many industries and a wonderful opportunity for Kiwis not to lose money, but to keep the purchasing power.

by governmentcheese | 19th Sep 12, 9:46pm 1348048015

Moesha Rabinowitz in the late 1930s fled his native land of Germany. He sold all his assets and converted it to gold and then had 5 sets of solid gold false teeth made. When he arrived in New York the customs official was perplexed as to why anybody would have 5 sets of gold teeth. So Moesha explained. “We Orthodox Jews have two separate sets of dishes for meat products and dairy products but I am so kosher and religious I also have separate sets of teeth. “The customs official shook his head and said, "Well that accounts for two sets of teeth. What about the other three? "Moesha then said "Vell us very religious Orthodox Jews use separate dishes for Passover, but I am so religious I have separate teeth, one for meat and one for dairy food. The customs official slapped his head and then said, "You must be a very religious man with separate teeth for food and dairy products and likewise for Passover. That accounts for four sets of teeth. What about the fifth set?" "Vell to tell you the truth, once in a while I like a ham sandwich."

by David George | 20th Sep 12, 12:38pm 1348101502

The $600,000,000 is exports, so, presumably, production less NZ domestic consumption.

Total production (2009) was 16 tonnes of gold (and 31 tonnes of silver - mostly as a by-product of gold mining) with about 12 tonnes of gold exported.

Government royalties (2010) for the entire mining sector were $6.5m.

So gold and silver production is well in excess of $1,000,000,000. cost of production (including the spare pennies in royalties) around $600/oz and profit $1500/oz.

Unfortunately the big producers are overseas owned, so at least 2/3rds of the gold income is repatriated to them and shows up in our current account deficit.

These are non renewable resources, dug up and gone forever - the profits go offshore. How dumb can you get?