It is seldom, when they have taken to conference platforms around the world, that DRD executives have passed up the opportunity to reaffirm the company’s abiding faith in gold’s inherent value as an investment. While their stance has earned them the adoration of gold bulls in the US, more bearish European commentators have been less complimentary.

    Now that gold appears to have settled comfortably above a US$330 base – a level DRD predicted the metal would achieve 18 months in more or less that timeframe – does the company feel vindicated?

    “Indeed,” says chairman and CEO Mark Wellesley-Wood. “We have spoken consistently about the unreliability of paper money and of gold’s unique ability to provide a long-term store of value to the international financial system.”

    Since Bretton-Wood, he says, other investment mechanisms have consistently failed to provide security in an uncertain world and investors have turned to gold for comfort.

    “The gold market’s performance in the past year or so is exactly in line with what we envisaged. The rise in the spot price has been investment led, with a whole new ‘generational’ appreciation of gold. The metal continues to regain authenticity with pension funds and the like.”

    Wellesley-Wood, who has supported the views of gold conspiracy theorists in the past, in particular the Gold Anti-Trust Action committee’s Bill Murphy, says he cannot help but feel that there continues to be “someone or something” wanting to control the gold market. “But recent developments would seem to indicate that their influence is waning.”

    DRD, Wellesley-Wood says, is “on the brink” of doing something about e-gold, which he dubs “gold for the masses”.

    “The attraction of using new technologies to enhance an ancient value system like gold is enormous; there is the potential to broaden the gold market to a whole new range of investors at a very low entry cost.”

    He notes, however, that current South African Reserve Bank policy, which continues to prevent the country’s residents from holding physical gold, is an obstacle that must be overcome if they are to benefit fully from gold’s “mass” onslaught.

    DRD continues to keep its distance from the World Gold Council (WGC), Wellesley-Wood says. The company’s “beefs” with the organisation have been that “it hasn’t represented value for money. It has had a huge infrastructure, distinguished mainly for gathering unreliable data and a lack of any promotional edge.”

    The WGC has completely ignored the recent growth in investment demand for gold, at its peril, Wellesley-Wood says, and he is not convinced – yet – that the organisation’s recent overhaul is likely to produce positive results.

    Any further DRD predictions of where gold is headed?
    “The US$400 psychological barrier is well on the way to being breached; after that, US$600.”

South Africa faces a “huge credibility problem” with overseas investors, says DRD chairman and CEO Mark Wellesley- Wood.

    “A leaked Mining Charter; a poorly conceived Royalty Bill; monetary policy that pursues lower inflation at the cost of job creation and everything else that fosters economic development; a 50% swing on the currency based on economic data – specifically, inflation figures – that are incorrect have all led to a state of bemusement about South Africa in the international investing community.”

   All of this is impossible to defend, Wellesley-Wood says. What is urgently needed is more policy co-ordination between government departments.

    “Inadequate” involvement “over years” by South Africa’s Chamber of Mines in issues affecting the mining industry has left the industry marginalised, in his view.

    “We’ve allowed ourselves to become the whipping boys – in respect of labour relations, taxation and environmental management amongst other issues.”

    The “social licence to operate” needs to be better understood, Wellesley-Wood says, because “this notion of hitting on the mining industry for everything is simply not acceptable.”

    DRD – “out of frustration” – and together with junior and black economic empowerment players in the South African mining sector, has been instrumental in creating the South African Mining Development Association (SAMDA), Wellesley-Wood adds.

    “In its short existence, SAMDA has done a good job articulating its members’ views and representing their interests with other stakeholders.”