The gold industry needs to begin a global marketing campaign to ensure steady consumer demand as consolidation continues, gold producers say.
At the Financial Times Gold Conference, gold miners and analysts agreed more needs to be done if gold is to compete with diamonds and platinum as a desirable product for consumers, Reuters reports. "How can we produce something which ultimately needs a consumer and then do nothing to promote the product to that consumer," Kelvin Williams, executive director of marketing at Anglogold, tells Reuters.
"The whole industry needs to lead the way," Terry Burgess, chief executive of Australian miner Delta Gold Ltd., says. "The World Gold Council can certainly be involved, but it should not have to coordinate on its own. Until now, companies have made gold and sold it off and not gone on to the next stage. Producers need to get more involved."
Williams tells Reuters Anglogold is joining with investment bank CSFB to take the initiative, but the industry needs to contribute to ensure success. "There has been too much emphasis on supply and not enough on the great attributes of gold--it can effectively sell itself if someone manages the marketing," Williams says.
Gold producers say more consolidation is also necessary for industry growth. "We have an industry that's sick; it's not returning on its investment," Wayne Murdy, president of Newmont Mining Corp., tells Reuters. "The bottom line is that it's not keeping pace with financial markets, and capital is going to ultimately be denied. The industry has got to be extremely efficient. I think that will drive consolidation."
The recent increase in consolidation has shown more potential for the gold mining industry. The price of gold stocks has increased since recent merger proposals, and WGC reports gold jewelry demand rose 7% in the first quarter this year. The industry hopes a combination of consolidation, steady demand and marketing can help gold out of its slump.
- by Julia M. Duncan