Despite Falling Prices of Gold, Mines Still Profitable

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After reviewing the second quarter costs of 152 gold mining operations around the world, Dundee Securities is confident that gold producers are still profitable at current prices. The price of gold may have fallen for most of 2008, but the decline has been far more dramatic in base metals.

The recent decline in the price of oil has investors, analysts and companies themselves looking at what level of profitability will remain intact. The same goes for gold, which continues to trade well off its peak of over $1000 per ounce in March.

After reviewing the second quarter costs of 152 gold mining operations around the world, Dundee Securities is confident that gold producers are still profitable at current prices. The price of gold may have fallen for most of 2008, but the decline has been far more dramatic in base metals.

Dundee analyst Paul Burchell said in a research note: We do expect revenues and earnings to decline given current bullion prices. However, we do not expect to see a significant number of mine closures caused by low gold prices.

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