Gold fell to below $1,100 per ounce last week, its lowest level since 2010, on fears of rising US interest rates and evidence of heavy selling in Asia. That means gold, which climbed from about $250 per ounce in 1999 and peaked at $1,900/oz in 2011, has retraced half of that long rise.
Shares in the largest gold miners have fallen sharply, exemplified by Canada's Barrick Gold, which has lost 30 per cent of its value over the past month.
But the UK's main players have fared less badly. Randgold Resources, the only gold miner in the FTSE 100, is down 14 per cent over the same period. Polymetal, a large Russian producer, is down 16 per cent.
Hunter Hillcoat, an analyst at Investec, says UK miners including Randgold, which has mines across Africa, and Centamin, which runs a mine in Egypt and started paying its first dividend this year, benefit from being debt-free. That is a big contrast with companies such as Barrick or AngloGold Ashanti. "It is the balance sheet that starts to concern investors when the margins get squeezed," Mr Hillcoat points out.
Citi analysts last week put a first "buy" rating on the shares of Randgold and Acacia Mining — formerly known as African Barrick and still majority-owned by the Canadian group — for the first time in three years.
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"They should be able to see out the tail-end of the gold bear market without too much difficulty and may even be able to take advantage of weakness elsewhere to consider corporate activity," Citi says.
Gold miners naturally have to be optimistic about long-term demand for the precious metal. Yet few like to guess where prices will head. Unlike industrial metals, there is little intrinsic demand for gold as an input for manufacturing. Prices depend less on need than on sentiment and outside macroeconomic factors.
Other than simply curtailing output, the best response of miners to falling prices is to cut costs. Cost inflation was a consequence of the broad commodities boom and miners' willingness to profit from higher prices by mining lower-grade reserves, meaning margins did not increase anywhere near as much as price rises might suggest.
Randgold, whose chief executive Mark Bristow is regarded in the market as one of the savviest gold miners, has insisted its projects have to be viable with gold at $1,000/oz. Many other miners used higher prices to justify expansions and face a greater squeeze.
"The industry has to reinvent itself and take some hard decisions to take out unproductive ounces," says Mr Bristow. "But it is very hard to recast a business when you have taken long-term decisions."
Gold miners are getting help from falling local currencies relative to dollar-priced output. Petropavlovsk, the miner of Russian gold, said this week that this year's costs would be 14 per cent lower, partly because of a weaker rouble.
Falling oil costs also help. Andy Davidson, head of investor relations at Centamin, says 25 per cent of the miner's costs are related to fuel.
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But Citi analysts say less than 10 per cent of gold companies worldwide could generate cash at current spot gold prices, while warning that improvements in cost cuts could be "unsustainable".
For the many UK companies that have rights to gold mines but need financing for production, the hunt for investors will get more difficult.
John McGloin, chief executive at Amara Mining, which is trying to develop a mine at Yaoure in Ivory Coast, says: "It has to work in a low gold price environment. In the pre-feasibility study our reserves were based on a very conservative gold price of $975/oz, and work is under way with the aim of delivering a project with reserves based on an $800/oz gold price that delivers strong returns at $1,000/oz.
"Gold is a very cyclical industry. We're towards the bottom of that cycle now and it's a very tough time for gold miners, but we will see an upturn in the price again eventually . . . for brave investors there is the chance to make huge gains in the medium term."