Fitch Says Gold Will Hold Up Reasonably Well Over 12 to 18 Months

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The current cash and credit crunch may actually have some benefits for mining companies despite the scarcity of financing and cost cuts. Fitch Ratings noted that "labor, energy, power and consumables costs for mining and metals producers should decline in a recessionary environment. Unit costs should benefit from taking marginal production off line."

Fitch Ratings Thursday said liquidity for the mining and metals sector is generally healthy as "most companies have taken advantage of strong prices to improve their assets and capital structure."

In their analysis on the liquidity of North American mining and metals, Fitch analysts Monica Bonar and Sean Sexton forecast that "gold producers should continue to benefit from a very strong pricing environment" as gold prices "hold up reasonably well over the next 12-18 months."...

The current cash and credit crunch may actually have some benefits for mining companies despite the scarcity of financing and cost cuts. Fitch noted that "labor, energy, power and consumables costs for mining and metals producers should decline in a recessionary environment. Unit costs should benefit from taking marginal production off line."

The analysts also advised that "costs should benefit from the decline in energy prices as well as production efficiencies."

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