Sep 24, 2019 - Economy & Business

Gold mining companies are shunning big projects despite rising prices

Gold mining companies are on the list of industries wary of spending in this economy.

The big picture: The trade war has dented CEO confidence and many companies are holding off on capital expenditures and large investments, but gold mining companies have typically splurged when prices of the precious metal have risen.

What's happening: Gold prices rose to a 2-week high on Monday, as the awful manufacturing and growth numbers from the eurozone urged investors to buy safe-haven assets, and the commodity is again rising toward an all-time high. But gold mining companies are being cautious. WSJ's Alistair MacDonald writes...

  • "Gold miners say they aren’t planning the same sort of megaprojects and acquisition sprees that characterized the last ramp up in prices in the years ahead of 2011. Instead, wary of volatile prices, they plan to pay down debt and return money to shareholders."
  • "Many companies, including the world’s largest gold miner, Newmont Goldcorp Corp., say they will only approve new projects if they can make money with gold at $1,200, about 20% below where the metal currently trades."
  • "Gold prices also have spent the majority of the eight years since 2011’s bust trading above that level, underscoring how conservative companies have become."

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