Gold declarations last year topped 700,000 ounces

– outlook positive for 2017

During 2016, Guyana’s gold sector was able to weather the impact of global politics and record a whopping 712,707 ounces in declarations.

According to the 2016 Annual Report of the Guyana Gold Board (GGB) this represents a 261,648 ounces or 58 percent increase over the 451,059 ounces that were declared in 2015.

In her contribution to the report, GGB Chairperson Joycelyn Williams stated that both output and declarations continued their upward trend, a confirmation that the sector continued to attract investment and reinvestment, responding to the constructive policies and business environment governing the sector.

She said medium level gold prices assisted the upward thrust while noting that the year’s declaration was a significant achievement in a heavy price-volatility market environment.

“The year 2016 was a mixed year for gold,” she said, explaining that a severalmonth-long bullish market in gold started in December 2015 when gold price found a bottom at US$1,049 per ounce, after the Federal Open Market Community’s (FOMC) historical meeting and the first interest rate hike for almost a decade.

Since then there have been higher highs and higher lows, with price reaching a peak at US$1,378 in early July in the aftermath of the British referendum on the withdrawal from the EU.

“With the gloomy outlook after the Brexit vote and the uncertainty about the outcome of the US presidential election, the future of gold was supposed to be rosy; however, that was furthest from the truth. During the month of August, gold prices moved lower after which [there was] an accelerated decline which began immediately following the US presidential election on November 8, 2016,” the chair explained.

Meanwhile, acting General Manager Eondrene Thompson noted that in achieving such a high declaration the gold sector has broken its production record by a significant margin, contributing approximately 12 percent to the country’s Gross Domestic Product.

The mining sector fostered by an upsurge in gold declarations by local and foreign mining companies grew by 45.5 percent compared to growth of 9.0 percent in 2015, Thompson explained.

She added that for the year under review, the GGB purchased a total of 214,447 ounces of gold, that is 47 percent or 68,736 ounces above total purchases for 2015.

This increase in purchases is being credited to the reopening of the Bartica office, concessions granted by government and efforts by government, in collaboration with the United States, to curb gold smuggling.

Specifically, small and medium scale miners are credited with declaring approximately 47.08 percent more in 2016 than they declared in 2015, while foreign investors – Guyana Goldfields Inc and Troy Resources Limited together – declared 190,604 ounces more in 2016 than they declared in 2015.

The report noted that Guyana Gold Fields Inc proposes to expand its operations, therefore a higher declaration is projected for 2017. This is only part of the expectations of an even stronger year in 2017.

Thompson stated that analysts predict that gold should top US$1,300 towards the end of 2017 as the “Trump reflation trade” reverses and subdued real interest rates, coupled with moderating dollar strength, provide positive momentum for the gold price.

“They predicted an increase of 5.3 percent over the gold price seen for the latter part of 2016. It is also assumed that Fed’s rate hike will have the biggest impact on gold prices – this is proposed to be at least twice in 2017,” she explained, adding that there is the inherent risk that the new US administration will widen the federal budget deficit or inflation will get out of control.

“In such a scenario, perhaps combined with greater trade protectionism and geopolitical tensions, gold could shine; however the expectations of fiscal stimulus may support the US dollar and real interest rates, which will be significant headwinds for gold at least for the first half of 2017,” she added.

Production increases are also expected as a result of government’s pledge to continue to provide operational concessions and lend support through infrastructural works while putting measures in place to ensure that declarations for 2017 outperform 2016.