WA Gold Companies "Floating on Cash" as Commodity Hits New Price Record

In the famous West Australian gold mining town of Kalgoorlie excitement and hope are acute as the price of the precious metal soars past the previous record. Gold is now flying above $7,000 an ounce, climbing 58 per cent in the last year. Resources industry commentator Tim Treadgold says the amount of cash in gold mining today is "almost unimaginable". "They're raising capital like it's going out of fashion," he said. He said the "demand overkill" was a symptom of "all time low" confidence in the US dollar. "China in particular is selling US government bonds as quickly as it can — people are withdrawing money from the US," Mr Treadgold said. "The US dollar has plunged, commodity prices which are traded in US dollars are going up, and you're seeing this now move into overdrive with the US president threatening his own central bank and demanding that it lower interest rates". For local historian Tim Moore, the new price was "earth shattering". "When we look back at the time when Paddy Hannan found the gold, we were looking at maybe four pounds an ounce," he said. "When it got to 100 people were so excited, and when it hit 300 they were breathing in paper bags." Mr Moore said there were buildings in Kalgoorlie built during the gold rush that were made using locally pressed brick, which contained between zero to six grams of gold per tonne. "During the gold rush period anything under five grams per tonne was a waste of time and effort," he said. "Now — the bricks in some of the walls — there's more gold in them than they are pulling out of the Super Pit." Historically high prices have significant flow-on effects to the town's economy, according to Mr Moore. But with a growing concern about the proliferation of fly-in-fly-out workforces, Kalgoorlie businessperson Ashok Parekh is hoping the high price will incentivise reinvestment back into Goldfields communities. Despite the high price, he said most shopfronts in the centre of the regional city were empty. "What I'd like to see is the state and local governments look at more infrastructure, releasing more land for people here to live so that we increase our community as opposed to fly-in-fly-out, which is necessary anyway," Mr Parekh said. Mr Parekh is the chairperson of locally based gold miner Horizon Minerals, which poured its first gold bar almost a year ago. The growth in price has meant Horizon has grown from being a $30-million company to being worth close to $270 million in two years, Mr Parekh said. The company has since purchased an unused mill from Poseidon Nickel and is in the process of developing it to be able to produce its own gold. The company is hoping to produce 75,000 to 100,000 ounces of gold a year. "There's a great future if you can convert the gold in the ground to gold bars," Mr Parekh said. As for what the future of the gold price holds, Mr Treadgold said it was anyone's guess. "I wouldn't even bother to tip a price because I just don't know, and quite frankly, they don't know either," he said. "I've made a fool of myself so many times in the past, I don't want to do it again."