Miners will need $3,000 gold price to be profitable, WGC head says

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Sentiment is still extremely negative. Be careful with your trading here. Don't let short term pain keep you from a long term gain. There is a wall of worry.
 
I wonder if the "unrests" have anything to do with Fed exporting the inflation (by doing QEs etc.), also exploding commodity and food prices, and the likes? For westerners, money that is losing purchasing power, is grab on our wealth, or a hidden tax on our savings/earnings, and/or readjusting your life to lower standards/expectations. Whereas, for hundreds of millions (if not billions) of people around the globe, increased prices of food, for example, make a difference between having a meal that day, and not having one at all. Or simply a difference between surviving, and starving.

Thus a lot of people at the end of the food chain, might have strong incentive to protest/demand increased pay, to keep up with the rising costs of SURVIVING (costs of living, but literally), and they simply have no other option left.
 
SRSrocco posted some commentary on a presentation recently addressing the subject of mining costs/profitability:
More: http://www.silverdoctors.com/gold-miners-will-need-3000-in-five-years-to-be-profitable/
 
or the Keynesian Plan (-:

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My Doctor’s an idiot. A few years ago, he started expressing concerns about my weight, pointing at this chart supposedly showing how much a man of my height should weigh. One glance at his stupid chart and it was clear to me that he had completely misdiagnosed my condition. There was nothing wrong with my weight, I just wasn’t tall enough. Clearly I needed to grow my way out of this. So I went home and googled “how to stimulate growth.” Once I got past the all the baldness cures and penis pumps (it’s not my bag, baby), I found hundreds of papers so incredibly boring I knew they had to be true. In no time, I was able to design and implement my own stimulus plan based on the irrefutable scientificky principles of Nobel prize winners and other people so smart they never had to do an honest day’s work in their lives. Despite the difficulty climbing stairs, I was feeling pretty good about things until my last check-up….
“Hi, Doc.”
“Hi,” he said, examining my file. He looked up, “You’ve put on twenty pounds since the last time I saw you”
“Thanks for noticing,” I beamed.
He frowned. “I remember now. You’re the guy on the diet designed to make you grow. What’s that called again?”
“The Keynesian Plan.”
“Is that the one where you eat bacon and cheese, but not vegetables?”
“No,” I replied, “But I have incorporated some elements of that plan” (I don’t like vegetables).
“And how’s this whole Keynesian thing working out?” he asked.
“I’ll admit I’m a little disappointed. I’ve only grown and inch and a half so far, but..”
“No you haven’t,” he interrupted, pointing, “You’ve just got those stupid elevator wedges in your shoes to make you look taller.”
“They’re to get me acclimated to being taller.”
“Which you’re not,” he declared. “I told you, you’re fully grown. The only thing you’ve succeeded in doing is collapsing you arches and giving yourself Type 2 Diabetes.”
“We Keynesians call things like that “unintended consequences” (I used finger-quotes to let him know it was a technical term). And trust me, Doc, I’m no happier about them than you. Can I see that height-weight chart of yours again?”
He handed me the chart. After a moment, I sighed, “Looks like I’ll have to do more QE.”
“What?”
“Quantitative eating. It’s how you stimulate growth, Doc. It’s technical.”
“Oh,” he said. “Because it sounds an awful lot like what we in the medical profession call “stuffing your fat face” (giving me finger-quotes, but in a condescending, not-at-all-helpful kind of way).”
I tried to stay calm and empathize. “Doc, it’s not your fault you haven’t been educated about Keynesian principles. They only teach it at top-notch schools like M.I.T. and Harvard. I don’t know about you, Doc, but I feel better knowing that no matter what happens on election day, the White House will be occupied by someone who attended Harvard.”
“As did the Unabomber,” he added.
“Still better than the bumblefuck medical school you went to!” I snapped.
“Johns Hopkins?” he queried, thrusting his eyebrows up.
“John Hopkins.” I corrected (Friggin’ Idiot!)
“Tell me, how are you paying for all this stimulus?”
“Food Stamps…and my ex-wife’s credit card.” (I just knew he wasn’t going to understand this part…)
He looked at me with a curious mixture of confusion and utter disgust. “What….Does she even know?”
“I’m no Dr. Bernanke, but I know one of the most important aspects of Keynesian stimulus is sticking someone else with the bill. It works out better for everyone if the victim, er , stimulus provider is unaware. She’ll be OK. I’m going to make it all up to her.”
“Really? How?”
“Look at your damn chart, Doc!” I bellowed. “I’m going to be taller than Shaq when all this stimulus kicks in! Can you say NBA contract?“
“No,” he said, unimpressed, “just over-sized casket.”
(I could tell he was about to launch into another one of his “austerity” sermons. You know, “Consume less, do more, stop spending other people’s money, blah-blah-blah.” Pinhead. Obviously Dr. Quackenstein was beyond all hope.)
“No offense Doc, but I need help from people with a better understanding of these things. Any chance you can refer me to the Mayo clinic?”
“Is that where the treat illness with mayonnaise?”
“Yes,” I said.
“No,” he said, and walked out.
As I sat down to rest in the lobby on the way back to my car, I remembered that the key ingredient to the Keynesian system is confidence and realized that what I was feeling, beside the tingling sensation in my left arm, was nothing more than the sting of rejection felt by true visionaries like Jon Corzine and the Octomom.
So if anyone asks, I’m at the grocery store
 
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Unobtanium said:
A potential jolt in the gold supply? 12,000 miners on strike at Gold Fields mine in South Africa.

August 31, 2012 5:25 pm
...
Click to expand...


http://www.zerohedge.com/news/2012-09-26/39-south-african-gold-production-now-offline
 
Does anyone have a similar chart for silver????? These charts are good to see. it reinforces my belief that i should be investing all of my meager amounts of money into PMs. as a 23 year old fresh out of college( and planning on going back in) I have a small amount of money to invest at the moment.
 
Golden Bullshine
Richard (Rick) Mills
Ahead of the Herd
http://aheadoftheherd.com/Newsletter/2012/Golden-Bullshine.htm


Here are a couple graphs from the article:

The first graph shows the price of gold rising in lock-step with mining costs:




The second graph show the replacement cost for an ounce of gold today, when you consider mining costs (cash operating costs) along with some additional overhead costs:
 
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The China-Adjusted Yearly Gold Supply

We have all heard and seen that the global gold mining supply has been on an increase since 2008. But what about the effect that China has on this supply? We see that global gold supply has been decreasing for the rest of the world, if you consider China's effect on the supply.

Here some charts from the article, Gold Supply Crunch Coming?:
http://www.caseyresearch.com/cdd/gold-supply-crunch-coming


The first chart shows yearly global gold mining production, including and excluding China's mining supply.




The second chart, The China-Adjusted Global Supply (mining + scrap), shows the yearly global gold supply (excluding China's supply), subtracting out what China buys off the global market. This chart shows the global gold supply that is left for the rest of the world after China has purchased; it has been decreasing since 2008.

 
Exactly the same effect, as emerging markets will/are having on oil supply/ prices. Less &less of it will be available for developed nations.

Sent from my Nexus 7 using Tapatalk 2
 

http://www.reuters.com/article/2012/12/12/usa-gao-royalty-idUSL1E8NC5MT20121212

Not sure how much mining is being done on Federal lands, but raising the cost of mining it isn't going to boost production.
 
...

Trying to find out (from Osisko -- not up on the above chart) their gold costs was what I was hoping to do this afternoon, looks like they can't see me, a pity...

My understanding is that the $1200 - $1300 "cash costs" is about right just to OPERATE the mines. Price keeps staying this low ($1230 or so as I write), then, yeah, they'll start closing.

But, as FOFOA sez, that may not influence the ("short-term" -- DCRB comment) price much because of the stock:flow being so high that even if ALL mines shut down that does not cause any short-term problem. <--- I suspect that psychologically mines shutting down, however, might somewhat go against FOFOA's paper gold price predictions, prices might indeed go up on a supply "scare"...
 
Tinfoil hat = on.

We have seen charts that show the major banks recently positioning from net short to net long in gold.

Keeping this in mind, does anyone think that TPTB have not only driven the POG and POS down to cover their shorts, but also to drive it down so far that they might purposely drive some of the miners out of business?

Wouldn't this match with what they have been doing in the retail market for decades now: Drive away the smaller grocery stores, hardware stores, department stores, local banks,etc via extra-low mega-store prices, buyouts and mergers. What we are left with is a small selection of mega-retailers, owned by the cronies of TPTB. I am also seeing this happen for the past two decades with technology companies in my field.

Why wouldn't they want to continue this trend with mining companies? Drive the smaller ones out of business and/or buy them out when they are in dire straits, such that in the end, they own all the mines.

Thirdly, driving some of the miners out of business is a good catalyst for the POG and POS to slingshot upward now that they have gone net long.

Tinfoil hat = off.
 
...

Interesting theory there Unobtanium, could be. Most miners HAVE to sell at market when they produce, they are among the weakest hands there are...

Big mines could eat up the smaller ones and/or the banks could eat them all...
 
JasonC said:
http://media.watoday.com.au/busines...gold-halts-production-at-nz-mine-4526841.html

A mine was just closed (production halted) in NZ due to the low gold prices.. First of many?
Click to expand...

A Nevada mine already closing:
http://www.mining.com/atna-resources-38601/
"American gold miner suspends work on Nevada project
Ana Komnenic | June 27, 2013 0 CommentsCommentsYour email address . Atna Resources (TSX:ATN), an American gold miner, dropped 20% on Tuesdays after deciding to put its Pinson Mine on care and maintenance, the company announced on Thursday."

"Atna says it will resume operations once gold prices are high enough to maintain a positive cash flow."
 

http://www.mineweb.com/mineweb/content/en//mineweb-gold-news?oid=196081&sn=Detail
 
South African PM miners are in trouble:
http://www.reuters.com/article/2013/07/07/us-safrica-gold-decline-analysis-idUSBRE96607120130707

"According to Roger Baxter, chief economist at South Africa's Chamber of Mines, in the fourth quarter of 2012 the price of gold averaged 509,000 rand per kilogram, but it fell in the first six months of this year to under 400,000 rand/kg.

"This precipitous fall in the price ... has been the biggest decline that has taken place since the 1920s," he said.

"At a 400,000 rand a kilo gold price, our estimate is that about 60 percent of the industry is in loss-making territory."

"Thomson Reuters GFMS ranked South Africa sixth in global production in 2012, when it fell behind Peru and produced 177.8 tons of gold, just 6 percent of the world total, the country's worst year for production since 1905."

"South Africa's fortunes as the world's No. 1 platinum supplier have been sinking, too, and top global producer, Anglo American Platinum (AMSJ.J), wants to cut up to 6,000 South African jobs to restore profits."

"South Africa's gold mines were able to earn tidy profits in 2008 and 2009 when gold was $1,000/oz, but costs - notably labor and power - have ballooned. In the fourth quarter of 2009 for example AngloGold Ashanti's (ANGJ.J) cash costs in southern Africa were $575/oz, but by the same period last year its cash costs in South Africa had doubled to $1,166/oz."

"...the NUM is seeking a 60 percent hike, over 10 times the inflation rate, for entry-level workers. Not to be outdone, the more hardline AMCU has made the fight for "a living wage" its battle cry under charismatic president Joseph Mathunjwa and wants an increase of 150 percent."

""We believe the minerals of this country must now benefit the people," it added. But unless the wage talks reach an outcome that reflects the balance sheet realities, neither companies nor workers can salvage a gold industry crushed between a toppling price and climbing costs."
 
I think listing them in this thread would be appropriate. It ties in with supporting the main assertion regarding the price of gold/silver necessary for sustaining (much less turning a profit) mines.
 
When you close a mine who gets the shaft? :doodoo:
 
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More on the South African mining stuff, Benjamen mentioned...

The two big unions, the National Union of Mineworkers (NUM) and the Association of Mineworkers and Construction Union (AMCU), have demanded pay increases of 60% and 100% respectively.
Click to expand...


an ounce of gold would cost nearly $1,400 to produce. At a time when the gold price has fallen to about $1,200, this makes many mines unprofitable.
Click to expand...

http://www.bbc.co.uk/news/business-23249467


Edit: The same article also says...

In 1970 South Africa accounted for 79% of world production - in 2012 it was 6%

South Africa still has 50% of known global gold reserves
Click to expand...

That seems incredible but I don't think it's true, another source ranks it third behind Canada and the USA.

http://www.visualcapitalist.com/portfolio/global-gold-mines-and-deposits-ranking-2012
 
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another one bites the dust:
http://lcn.freedgold.com/2013/06/no-jolly-up-for-mining-companies.html

wheew, it goes much quicker that I've anticipated!
 
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