Saturday, 3 July 2010

China and gold mining in Alaska

China has reached her first gold target, expanding holding from 600 tonnes to 1,000 as of last month. But she has stated her intention to boost stocks by 10,000 tonnes over the next decade. This source reports on a new long-term contract to purchase gold ore from the Kensington Mine in Alaska.

The mine is about 400 miles from the Klondike, so unfortunately not quite justifying the inclusion of photos of grizzled - they always are, aren't they? - prospectors from the late nineteenth century.

Another difference - perhaps typical of the modern (what is post-modern?) age - is that this is a high-level government deal. It's not about the individual struggle for enrichment and independence. Central banks have also reversed their long-term policy of releasing gold onto the market to depress its value and are now beginning to buy, as Mark O'Byrne suspected 18 months ago.

These developments are likely to support the price of gold, even though it has quadrupled (in dollar terms) in the last 10 years. But the expansionary plan could also be seen as a straw in the wind, for those who see gold as a store of wealth in increasingly uncertain times.

Just for fun (and a little right-brain stimulus), here's a picture of Chinese gold prospectors in California:

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