The chief executive of AngloGold Ashanti Ltd said Sunday he expects gold prices to hit $2,200 an ounce by next year and hinted the South African mining company could boost its dividend.
The bullish forecast from CEO Mark Cutifani comes as the uneasy economic landscape -- including an unstable euro, recently hamstrung Swiss franc and tenuous U.S. debt situation -- push investors into the precious metal.
Given that we've already seen $1,900 gold, I don't think it's unreasonable to expect a price going up to $2,000, even $2,200, Cutifani told Reuters during a tour of AngloGold's Cripple Creek & Victor mine in Colorado.
It's based on what's happening in the markets, the issues in the U.S. and Europe.
The price of gold has jumped about 40 percent in the past 12 months alone. Spot prices are currently trading around $1,800 an ounce.
We're making cash at anything above $1,000 an ounce, Cutifani said. So we're pretty well-positioned now.
Cutifani and other mining executives will meet in Colorado Springs this week for the annual Denver Gold Forum, one of the largest gatherings of its kind in the world.
Forecasts for the price of gold will be the talk of the town, but many investors also will be peppering CEOs with requests for higher dividend payouts.
While Johannesburg-based AngloGold raised its dividend last month to 12 cents per share, its dividend yield is roughly 45 percent of Barrick Gold's, the world's largest miner and a major competitor.
AngloGold had $839 million in cash at the end of June, funds that could help it lift its quarterly payout.
We're already talking about the dividend policy with the board, Cutifani said. When you've got the free cash flow that we've been generating lately, with our growth profile, it's obviously a front and center conversation.
We'll have some comments at the next quarterly earnings statement, set for November 9.
A higher dividend could help AngloGold combat a percolating thought amongst gold industry investors that it is better to buy gold exchange-traded funds rather than stocks in actual miners.
Buying ETFs let investors take part in gold's rise without being held back by strikes, power outages or other situations that can halt production, some have argued.
SPDR Gold Trust and ETFS Gold Trust are two large gold ETFs.
The SPDR Gold Trust, for instance, jumped 41 percent in value in the past 12 months compared with a 9 percent jump in shares of AngloGold traded in New York.
We think in terms of fundamentals we've demonstrated we've outperformed the ETFs in terms of cash flow from operations, Cutifani said. In time the market will get it, and we'll get credit for that.
(Reporting by Ernest Scheyder; Editing by Himani Sarkar)