The gold price has slumped 26 per cent in 6 months, sending the sector into a frenzy.
Amidst falling prices and increasing operational costs, Northern Star Resources managing director Bill Beament has called for the gold sector to reinvent itself, The West Australian reports.
Speaking at an RBS Morgans breakfast yesterday, Beament warned investors will continue to leave WA unless drastic measures are taken, saying the heat is on the gold sector.
"Conditions are a lot worse than people in this room actually realise at the moment," he said.
"There has been a massive exodus, particularly from the US funds, out of the gold sector and I think we have lost touch with our investors."
Northern Star is one of the few junior miners to release comprehensive "all-in" costs for its operations over the March quarter, bucking the trend of other juniors who publish just production costs to calculate per ounce figures.
Northern Star is quoting a figure of $935 an ounce which sits towards the bottom of WA's cost curve.
Beament argued that refusal by most WA producers to provide all-in costs fuelled the industry's weak investment reputation.
"The gold industry needs to lift its credibility," he said.
"We need everyone to make money, and create profitability, because the negative sentiment at the moment isn't going to change until we can generate returns and show people we've got good yields."
Overnight gold slid below the US$14000 mark, its lowest level in almost a month as resurging US economic confidence undermined bullion’s safe-haven status.
"There is no reason to own gold as long as people keep on putting money into the stock market. You can see it everywhere that the economy is turning around," Comex gold options floor trader Jonathan Jossen told SMH.
Neil Charnock, an economist at leading gold investment and trading company Gold Oz has predicted the price of gold will drop further as the market faces what he calls a ‘correction’ phase that is expected to last for at least 12 months.
“My gold targets are at around US$1100 and possibly as low as US$900 with a major influence of a strong USD over this correction period,” he told Australian Mining.