Mining giant Dakotas gold reserves have soared by about 1,000 metric tonnes over the past year, to nearly 1,500 tonnes, as the market for its mineral rights boomed amid fears the region could become an offshore capital for big corporations.
The company is hoping to tap the lucrative mineral-rich mineral rights that lie on the edge of the Dakotas vast plains and the state’s border with Oklahoma.
The prospect of more investment has fuelled a market for gold and silver bullion, with the price of gold falling from $US100 an ounce to less than $US10 an ounce in a year.
But Dakos gold has been hit by a boom in the past five years, as a growing number of small-scale gold mining operations have popped up in the area, according to data from the state Department of Energy and Resources.
“The prospect is there to be a big gold boom in South Dakota,” said Robert Rosenthal, chief executive of Dakotic Wealth Management, a North Dakota-based wealth management company.
“The price of silver has come down, and we think there’s a great opportunity for Dakoteans to be able to diversify.”
Mr Rosenthal said his firm’s clients include large companies and pension funds, as well as individual investors.
He said the market has grown so fast that it could create a wealth of more than $100 million in one year, compared with a projected $50 million for DAKotas mines.
“It’s a very dynamic market, so you need to be prepared for volatility and you need a diversified portfolio,” he said.
Dakotans gold reserves jumped more than 6,000 tonnes last year to about 1.5 million tonnes.
Mr Rosenson said he expects the gold boom will last until 2022, but he cautioned investors not to take too much risk, given the low cost of gold.
“I don’t want to put too much stock in gold bullion,” he told the ABC.
“If you look at the average price per ounce, it’s just $US8, so that’s a good place to be.”
Mr Robert Rosental said Dakotics mine in the Dakota Desert has produced more than 2,500 metric tonnes of gold and was now producing about 1 million tonnes per year.
“You’ve got to think about the risk of investing in a project like that and not the return,” he added.
Investors are buying in Dakotos gold, but Mr Rosenthal is wary of any sudden jump in prices, which he expects will continue until 2022.
“We’re very much aware of the volatility of the gold market.
We’ll continue to monitor that and if there is a spike, we’ll do what we can to mitigate the risk,” he explained.
Mr Robert Rosenthal said DAKots gold is priced at about $US15 an ounce.
The gold price in the US dropped sharply in January, after a US regulator lowered its expectations for a spike in gold prices.
However, that spike has come and gone, and investors are still buying DAKotos gold at a high level, Mr Rosental told the CBC.
“At the end of the day, it is what it is.
You don’t know what’s going to happen in the future.”