This page has been archived and commenting is disabled.

Gold Drops Below Its Average Cash Cost

Tyler Durden's picture


As shown two months ago, the marginal cost of production of gold (90% percentile) in 2013 was estimated at $1300 including capex. Which means that as of a few days ago, gold is now trading well below not only the cash cost, but is rapidly approaching the marginal cash cost of $1104...



Which means that of the following mines (as we showed here) which make up the gold cost curve, one by one, starting on the right and going left, production is going to go dark, even without the recent demand by South African gold miner labor unions to have their wages doubled. Until eventually virtually no gold will be produced.



It is at that point where one must apply the New Normal supply and demand curve, when one can predict a $0 per ounce price for gold, as physical demand continues unabated, while actual physical, not paper, production has now started going offline.


Joking aside, not even Bernanke and all the paper Gold ETFs in the world will be able to do much to suppress gold prices from reaching their fair value when gold production hits a standstill, and when demands, especially by China, is still in the hundreds of tons each year.


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Wed, 06/26/2013 - 13:07 | 3695634 Dareconomics
Dareconomics's picture


The gold rout continues.  Slowing world economic growth, taper talk and the lack inflation are the major culprits.  Gold will remain a poor investment for the immediate future, but it is still valuable as a disaster hedge.

Wed, 06/26/2013 - 13:12 | 3695662 greatbeard
greatbeard's picture

>> the lack inflation

Lack of inflation?  I'm guessing you don't run a mining operation, nor a household.  Go buy a bag of groceries and then tell me there's no inflation.  Got a cat or a dog you buy food for?  Eat canned fruit? Go to the doctor? No inflation?  Seriously?

Wed, 06/26/2013 - 13:17 | 3695706 Spastica Rex
Spastica Rex's picture

You're not applying hedonic adjustments properly.


Wed, 06/26/2013 - 13:18 | 3695714 ParkAveFlasher
ParkAveFlasher's picture

Gold = orange juice

Wed, 06/26/2013 - 13:24 | 3695754 Spider
Spider's picture

If you use all-in costs gold is bigtime negative now...

Not much gold going to be around next year - i'll buy mine now

Wed, 06/26/2013 - 13:41 | 3695867 DoChenRollingBearing
DoChenRollingBearing's picture

The Central Bank of DoChenRollingBearing shares your view, and will be buying physical gold as funding permits.

Wed, 06/26/2013 - 14:43 | 3696180 Triggernometry
Triggernometry's picture


[Back Up The Fucking Truck]

Wed, 06/26/2013 - 15:08 | 3696229 ZerOhead
ZerOhead's picture

Welcome to the final act of 'Voodoo Economics' the play about making lots of money.

In Act IV Scene II not only do deficits no longer matter... production costs now don't either.


"Let the Good Times Roll" until the wheels fall off...

Wed, 06/26/2013 - 15:08 | 3696303 disabledvet
disabledvet's picture

"start digging with your hands bitch. where's my money." move along.

Wed, 06/26/2013 - 15:52 | 3696512 The Shootist
The Shootist's picture

AG in a mind boggling 62% correction. Stawks -5%?

Wed, 06/26/2013 - 16:14 | 3696602 knukles
knukles's picture

Somebody around hereabouts used to say it only cost $5 to mine.
I hate this disinformation!

Wed, 06/26/2013 - 16:45 | 3696678 ZerOhead
ZerOhead's picture

It costs less than $5 a barrel to lift light crude in many of the Persian Gulf states but that doesn't affect prices downward much does it?

There are producers who could profitably extract gold for $400 an ounce and there are producers who need $1,200 or more to produce profitably. There is also a lot of gold that is brought into being as a by-product of the production of some other base metal like copper.

The largest producing gold mine in the world, the Grasberg mine in Papua, Indonesia, is primarily a copper mine.[6]

I can imagine that a lot of the new production being brought on-line is of the $1,200 type... you know marginal projects that were sidelined for years until the prices were high enough to permit economic extraction... supply could get even uglier if copper prices ever plunge...

Wed, 06/26/2013 - 17:03 | 3696770 boogerbently
boogerbently's picture

If miners DOUBLE their price, what's the rest of the world going to do......not buy it ???

Wed, 06/26/2013 - 17:46 | 3696947 DaddyO
DaddyO's picture

Buy, Buy Buy!!!!

Went by the LCS today and they had nothing!!!!

Owner told me she got 3400oz of silver on Saturday and sold out yesterday.

What the heck does this mean? /sarc

Great buying opportunity, that's what it means...


Wed, 06/26/2013 - 23:14 | 3697902 The Shootist
The Shootist's picture

"If miners DOUBLE their price, what's the rest of the world going to do......not buy it ???"
You forget, unlike OPEC, an organization that supports profits for members, the World Gold Counceil enacts "Brown's Bottom" type moves constanly in trying to destroy the industry. (Their infiltrated by paper pushers.)

Thu, 06/27/2013 - 00:46 | 3698097 Supernova Born
Supernova Born's picture


Luca Brasi sleeps with the fishes.

NewThor is correct. It is going to take an apocalyptic event for gold to achieve actual price discovery.

Thu, 06/27/2013 - 01:17 | 3698153 Manthong
Manthong's picture

M F freakin crap..

go price a Rolex President to figure it out.

Thu, 06/27/2013 - 00:48 | 3698104 The Navigator
The Navigator's picture

Same story here in SoCal DaddyO

Went to my LCS yesterday, no silver - but they had some 30 Morgans/Peace clunkers - I bought 15 @ $22/each.

Great buying opportunity if inventory can be found.

Wed, 06/26/2013 - 20:13 | 3697337 CPL
CPL's picture

They tripled it actually.



Wed, 06/26/2013 - 20:52 | 3697456 old naughty
old naughty's picture

b,b...but China has so many AU mines thay can come on stream, no?


Wed, 06/26/2013 - 23:19 | 3697911 CPL
CPL's picture

Considering China has been mining them for 3500 years, only way they are getting anything out of them if they are pulling a BreX and shoveling coins down the hole at market cost.


Definition of a liar, man standing over an empty hole telling you something valuable is down there.  Works in oil and mining for some unknown reason.

Wed, 06/26/2013 - 18:49 | 3697126 Dugald
Dugald's picture

400 to 1200 is right on the moeny.....a chum recently discovered a deposit in

Victoria (Oz) which was promptly snapped up by the chopstick jockeys....

Wed, 06/26/2013 - 21:06 | 3697483 disabledvet
disabledvet's picture

"King Dollar" isn't the only currency out there. i do agree "where is the deflation?" but gold...let alone silver...doesn't collapse in price as they have "because inflation is imminent." the precious only does this because FALLING prices are imminent. the "math" simple enough: "i can think of a lot of things less valuable than gold." here's some interesting math to make you go "hmmmmm": this is the "middle of the driving season" folks. guess what...Americans have stayed home. "and this is the second month in a row for this type of build." these are MASSIVE numbers and even MORE massive "missed estimates." believe somebody is massively long this b.s. AND THEY'RE DEAD AND THEY KNOW IT.

Thu, 06/27/2013 - 00:53 | 3698114 Lore
Lore's picture

No jobs = No commuters = Vehicles sitting in garages with full tanks of gas.  At least the "greens" will be happy.  Economic collapse is a marvelous way to "get people get out of their cars."

Wed, 06/26/2013 - 22:29 | 3697749 HardAssets
HardAssets's picture

Depending how you draw the charts, Ag has retraced about as much as in 2008. Its too early to predict anything with any degree of confidence at this time. That said, Ag made a pretty dramatic move back up after the 2008 crash.

Wed, 06/26/2013 - 16:10 | 3696590 Kirk2NCC1701
Kirk2NCC1701's picture

PLEASE, dear Jesus, show us that you love the Common Man. 

Give us gold at $100/oz.  And Silver at $5.


Wed, 06/26/2013 - 17:29 | 3696879 illyia
illyia's picture

Okay. But you will have to trust my I.O.U.


Wed, 06/26/2013 - 17:38 | 3696921 gmrpeabody
gmrpeabody's picture

Be careful what you ask for...

Wed, 06/26/2013 - 21:19 | 3697522 disabledvet
disabledvet's picture

kerosene used to be hopelessly dear "back in the day." after if displaced whale oil (think the book Moby Dick) it was not long thereafter that it too was replaced by electricity and distillates made from "crude oil." where at one of those inflection points right now...where oil is the new kerosene. a more ancient example is salt..."and the great salt roads" that still exist today in europe and elsewhere. needless to say if you showed someone from even 100 years ago "table salt" they'd be flabbergasted. simply put the human race will never run out of salt. it will never run out of oil. it will never run out food. it will run out of money however...we always do.

Wed, 06/26/2013 - 23:39 | 3697969 GoinFawr
GoinFawr's picture

I like that!

Wed, 06/26/2013 - 18:00 | 3696992 rogeliokh
rogeliokh's picture

Cash Costs at Crimex still Alright, Nothing to worry about, just print and sell
Why bother to mine? close the mine and if you need GOLD spend mining expenses shopping at Crimex -
Still the FED's most profitable mine around. "We print GOLD future contrast all the time" Zero expenses.

Wed, 06/26/2013 - 19:55 | 3697290 Whiner
Whiner's picture

Then Peter said, Silver and gold have I none; but such as I have give I thee: In the name of Jesus Christ of Nazareth rise up and walk.

Wed, 06/26/2013 - 21:16 | 3697509 howenlink
howenlink's picture

Pretty sure that wasn't Peter Schiff.

Thu, 06/27/2013 - 02:04 | 3698224 merizobeach
merizobeach's picture

The Schiff isn't fiction, either--another big difference.

Wed, 06/26/2013 - 20:18 | 3697341 CPL
CPL's picture

I'll write you an IOU on that 'forthcoming' bar of silver and gold.


And yes...the truck is backed up.  Nobody has anything on hand or expecting delivery anytime soon.  Water, water everywhere and not a drop to drink.

Wed, 06/26/2013 - 17:03 | 3696772 Panafrican Funk...
Panafrican Funktron Robot's picture

Didn't see this posted anywhere else, but it's worth noting that today is metals futures opex.

Wed, 06/26/2013 - 17:39 | 3696924 ZerOhead
ZerOhead's picture

OK there's the MOTIVE... now let's see what's left... oh right OPPORTUNITY and ALIBI... hmmm....

Wed, 06/26/2013 - 20:41 | 3697423 auric1234
auric1234's picture

Where do you see this day quoted? That was yesterday according to the calendar:


Wed, 06/26/2013 - 14:50 | 3696223 Car 54 Where Are U
Car 54 Where Are U's picture

I have a small US miner that sells 1-10 Troy oz bars, assay certified, numbered, 99.95% pure at 5% BELOW spot to finance opening his other concessions. His refiner will purchase back at 1% below spot. Give me a shout and I'll hook you up.

Wed, 06/26/2013 - 17:05 | 3696787 General Decline
General Decline's picture

Darn. This is bad timing. I just sent my last dollar to a Nigerian prince.

Wed, 06/26/2013 - 17:20 | 3696844 HulkHogan
HulkHogan's picture

My mom's cousin-in-law makes $1697 an hour from her computer. Click here to find out how @

Wed, 06/26/2013 - 17:55 | 3696975 THX 1178
THX 1178's picture

Your mom cries like a little bitch when I bend your dad over the couch and put the fuckin D in him.

Wed, 06/26/2013 - 18:19 | 3697048 Charles Nelson ...
Charles Nelson Reilly's picture

Whoa.... You sure you got the right forum?

Wed, 06/26/2013 - 19:10 | 3697182 Temporalist
Temporalist's picture

And why the restraint on the "D" instead of...whatever?  Like the rest of the comment wasn't profane.

Wed, 06/26/2013 - 20:18 | 3697359 Jack Napier
Jack Napier's picture

Just a pinch, dare I say, a touch of class.

Wed, 06/26/2013 - 21:08 | 3697488 OpenThePodBayDoorHAL
OpenThePodBayDoorHAL's picture

Let's see, D...D...D...Digit? Davenport? Dentures? D-9?

Wed, 06/26/2013 - 21:18 | 3697520 howenlink
howenlink's picture

I think he meant D as in golD.  Just didn't want to say it.

Thu, 06/27/2013 - 01:01 | 3698127 Lore
Lore's picture

Velvet Jones School of Technology

"make 1500 dollars without leaving the conforts of you own bedroom"

Wed, 06/26/2013 - 19:25 | 3697219 Dave Thomas
Dave Thomas's picture

When Charles Nelson Riley gets upset about a Dad rape montage you know you've gone too damn far.

Wed, 06/26/2013 - 21:39 | 3697552 HardAssets
HardAssets's picture

The big question is what will happen if the Chinese economy completely crashes ?  There are those who say they have a terrible real estate bubble. Does gold crash in that scenario, or do more people over there go to it as a refuge ?  Hmmmmm . . . . we live in very 'interesting' times.

Thu, 06/27/2013 - 10:02 | 3698886 timothyi
timothyi's picture

It can go either way, depending on the amount of margin debt or leverage in the system.  If it's an all-cash market and the market crashes, that cash flows into some other (supposedly safer) asset.  If it's heavily leveraged and the system crashes, that value just disappears--it's lost to the system.  In fact though, it can also take down other parts of the system as people draw upon other assets to cover their debt obligations. 

I have no idea how heavily leveraged Chinese real estate is--but that makes all the difference in your scenario.

Wed, 06/26/2013 - 13:42 | 3695876 AllThatGlitters
AllThatGlitters's picture

Yup. Look at spot gold in real time:

Change it to a weekly, and you begin to realize:

At some point, here or $50 lower, I don't know, it will suddenly shoot higher.

Sure, dealers have some retail gold available, with premiums still low.  But for how long? When do the premiums start to rise?

Wed, 06/26/2013 - 13:48 | 3695918 NotApplicable
NotApplicable's picture

Dealers are being cleaned out, and if they haven't raised their premiums, they are toast, as they will not be able to restock at anything near spot price (if at all, once Comex breaks).

It will be interesting someday, to see how the US Mint justifies ending production of Eagles, given its production is a "law."

Wed, 06/26/2013 - 16:38 | 3696681 jvetter713
jvetter713's picture

lol.  A law today can become a guideline tomorrow.

Wed, 06/26/2013 - 17:03 | 3696776 boogerbently
boogerbently's picture

And "discriminatory" the next day.

Wed, 06/26/2013 - 17:40 | 3696928 gmrpeabody
gmrpeabody's picture

And eventually..., treason.

Wed, 06/26/2013 - 21:07 | 3697485 bonderøven-farm ass
bonderøven-farm ass's picture

...or simply 'discretionary'.

Thu, 06/27/2013 - 00:03 | 3698006 Enemy101
Enemy101's picture

Until Obscure is mentioned...

Wed, 06/26/2013 - 20:19 | 3697363 CPL
CPL's picture



And yes the dealers are empty.  Banks are empty.  Pawn shops are letting people stand in line to say they haven't got any.

Thu, 06/27/2013 - 00:04 | 3698008 Enemy101
Enemy101's picture

Quick FYI not true. Was recently in one of the larger vaults. Lots of bars.

Wed, 06/26/2013 - 13:54 | 3695957 SheepDog-One
SheepDog-One's picture

I've been hearing gold is set to shoot higher, 'to infinity' even, for like 3 years now. Something tells me gold will be the last thing around to rise and when it does, it will be the least of anyones concerns.

Wed, 06/26/2013 - 16:11 | 3696575 Chupacabra-322
Chupacabra-322's picture

While the supply for physical gold and silver may be at risk of falling, demand has been soaring. In the months of April and May, China and India together consumed more gold that was produced worldwide by mines or as salvage from recycled scrap during those two months. Beyond that, other central banks were buying gold reserves such as Russia and South Korea. Then you have demand from private investors. Some photos circulated around the Internet about a week ago of about 10,000 customers waiting in line to make purchases from a gold-selling store in China.

Some have argued that investor demand for physical gold and silver is falling, as evidenced by the drop in the number of outstanding shares of the largest gold and silver exchange-traded funds (GLD and SLV, respectively). Contrary to what these naysayers proclaim, I believe that the physical metals were withdrawn from these ETFs in order to meet demand for physical gold and silver from commodity contract owners who want to own physical metal rather than paper.

As for the timing of the price drops, on days when the stock or bond markets or maybe some currencies are weak, it wouldn’t look good for the U.S. government’s interests for the prices of gold and silver to be going up. Some investors, if they saw this happening, just might be tempted to bail out of their paper assets and switch into something safer such and gold and silver. To me it is no surprise that the drops in precious metals prices over the past two weeks occurred at the same time that both the stock and bond markets were tanking. With gold and silver prices falling at the same time as paper assets, it is much less likely that the average investor would get out of paper assets for tangible gold and silver.

In the immediate term, I think the U.S. government has a plan to hold down gold and silver prices through this weekend, which marks the end of a calendar quarter where technical chart traders derive some of their numbers. Next week, I suspect that prices will stay down as many people focus on the upcoming July 4 holiday weekend.

In fact, I have heard from multiple level-headed analysts and traders who remain bullish on the intermediate and long-term outlook for gold and silver. Yet, at the same time they fear that prices could stagnate as long as the next three months. Even though the fundamental supply/demand equation for physical metals is so favorable for much higher future prices, the current doldrums could last until September.

Last Friday, I was interviewed for an article where I stated that a lot of potential buyers of physical gold and silver are growing weary of the eight months-long decline in precious metals prices. Even though their rational mind might tell them that current prices are a bargain compared to what is likely to happen in the coming months and years, they are just as fearful that we haven’t yet touched the final bottom of this correction. To say it another way, I think a number of investors will sit on the sidelines until there is a definite sign that gold and silver prices are on their way back up.

Although we have seen demand for physical gold and silver pick up at my store in the past few days, it is nowhere close to the buying surge we experienced after the price drop in mid April. I am confident that prices will soar much higher mostly because I am confident that the U.S. government is running out of measures to prop up the value of the U.S. dollar. If, for instance, the price of gold reached $1,420 and silver topped $25 within the next few months, I would expect so much buying to be happening that it will make April’s surge look modest by comparison.

Today, it is still possible to acquire many forms of physical precious metals – and get them at almost normal premiums. By the time September rolls around, I cannot guarantee availability or premium levels. The time to acquire insurance against the risk of falling paper asset values, which I consider to be the most important reason to own physical gold and silver, is when you don’t need it. Don’t wait until paper asset values drop another 10 percent and it is difficult to acquire precious metals, no matter the price.

Yes, I am sticking out my neck in expecting much higher gold and silver prices, but figuring that there will be some time lag before prices go uphill. I am equally convinced that those who made purchases sometime between early October and now will be very happy they did and then held onto them, even though they might wistfully think about how much less these tangible assets might have cost if purchased today.

In the meantime, these lower prices are making coin dealers and hard asset market analysts and newsletter writers look like they don’t know what they are talking about. In the short term, anything is possible. In a couple of years, I expect the epithets that will be thrown at me are for being too cautious in my recommendations. You just cannot please everyone all of the time.

Wed, 06/26/2013 - 17:31 | 3696891 Thisson
Thisson's picture

When price falls, demand increases.  However, this is not the same as the demand curve shifting which is what is necessary to drive gold and silver prices higher. 

Wed, 06/26/2013 - 20:23 | 3697375 CPL
CPL's picture

You don't understand what is happening.  This is people abandoning their fiat.  They aren't investing in it.  They are exiting.


There is no 'higher' price now, nor a 'lower' price because of unavailability.  This is what a dollar collapse looks like to the western world.  Outside the western world, they aren't taking USD now.  This is because now many other countries have decided to just ignore the US, cut their losses and move along.

Wed, 06/26/2013 - 21:28 | 3697537 disabledvet
disabledvet's picture

here's the wiki for what this guy is talking about: you're an American bro. We had an "industrial revolution" our curves shift.

Thu, 06/27/2013 - 00:23 | 3698062 DaveyJones
DaveyJones's picture

well said 

Wed, 06/26/2013 - 16:49 | 3696716 WezTheJuic
WezTheJuic's picture

Very true on many levels SheepDog.


This latest round of crap that has been hitting us all for these many years, is different and more refined then I expected.  Yet, what is at the bottom of the rabbit hole?  That choice still remains to be yours as any individual choses.


YES, it is still called, "free will".  While within those levels of conditioning do create many constructs that present and create a spectrum of net results.





Wed, 06/26/2013 - 20:22 | 3697370 Jack Napier
Jack Napier's picture

SheepDog, we're never going to see "to the moon" prices in gold and silver. As soon as metals rattle the fiat cage it will be a new game with metals becoming the valuation method, fiat going the way of the dinosaur, and the buying power of metals will go through the roof after dollar denominated price is commonly known as a barbarous relic.

If the goal is to profit in debt based currency, then a debt slave you will stay. If the goal is real money then you've already won, provided you have enough other disposable income to make ends meet in the interim.

Wed, 06/26/2013 - 20:35 | 3697404 tmosley
tmosley's picture

Three whole years, huh?

Nigga you just went full plebian.  Stop doubting the math, and start doubting the ability of the people in charge to bend prices to their whims.

Wed, 06/26/2013 - 22:53 | 3697823 Bringin It
Bringin It's picture

Same as last time ... and probably the time before that too.

Wed, 06/26/2013 - 22:59 | 3697841 Bringin It
Bringin It's picture

and the time before that as well.

Wouldn't it be wise to get this written down in stone somewhere? and taught to our children ... and their children too?

Thu, 06/27/2013 - 02:20 | 3698250 underman
underman's picture

The current gold price and it's ongoing drop has nothing to do with tangible gold itself.  It's 100% driven by leveraged paper selling/shorting/puking.  Physical holders are not selling anything, quite the contrary.  It's a blue light special on true and ever-lasting wealth. 

Gold has increasingly become a hedge against flooded fiat (QE) and broken promises (sovereign defaults.)  Hence physical buying.  TPTB need fiat to succeed to stay in power - so they attack and discourage such hedging, by eroding the so-called gold price, via massive leverage in paper.  Nothing more, nothing less.  

How will physical gold react when it's truly set free of the paper market?  When it's nearly impossible to find/purchase?  With less than what, 1% of the US population, currently owning gold?     

Wed, 06/26/2013 - 17:55 | 3696977 Marco
Marco's picture

The premium goes up when the market decides there are significant odds of counterparty failure ... don't hold your breath.

Wed, 06/26/2013 - 13:43 | 3695888 NotApplicable
NotApplicable's picture

As for the "exploding gold price" forecast, once the market goes dark (ala Comex force majure), I'm expecting no market price to exist at all, while sovereign demand will be resolved via nationalization.

Oh, and the MSM will call PM holders every name in the book in an effort to dehumanize you (then come the drones).

Wed, 06/26/2013 - 15:57 | 3696523 SRSrocco
SRSrocco's picture

There is no gold mining company that has a MARGINAL PRICE at $1,104.  As I mentioned in a previous post, Harmony Gold is now loisng $230 an ounce at the current price. 

Furthermore, more CAPEX was been spent by the top 10 gold miners in 2012 which almost cuts any POSITIVE CASH FLOW to nearly zerio even when the price of gold was at $1650.

I will be posting more about this at the SRSroccoREPORT

Wed, 06/26/2013 - 15:57 | 3696539 DoChenRollingBearing
DoChenRollingBearing's picture

Post, brother!

Disclosure: the bearing guy is now a fan of SRS...  :)

Thu, 06/27/2013 - 00:49 | 3698106 Flagit
Flagit's picture

nifty site. all the graphs with updating numbers. makes me feel like im at mission control.

i like the article about the YouTuber silver analysis too.


Wed, 06/26/2013 - 13:24 | 3695757 Pladizow
Pladizow's picture

The price can continue to drop below the "all in cost" as long as inventory is available - only when that is gone and the mines dont supply, will we seee a golden rocket!

Wed, 06/26/2013 - 13:30 | 3695773 fonzannoon
fonzannoon's picture

what happened to that silver mine that collapsed and and took all that supply with it. Nothing makes sense.

What is also odd is I always see people throwing out stats of the amount of gold above ground and how that absolutely dwarfs supply. So in that case the whole mining supply argument should not amount to much and those mines can drop dead and it won't matter.

Or above ground gold is not being sold and that tiny amount coming out of the ground is the only supply around, in which case something somewhere should blow up soon enough. The longer it does not the more concerned I get.

Wed, 06/26/2013 - 13:31 | 3695805 Spider
Spider's picture

Mine Supply makes up 2/3 of gold supply every year:

People dont understand this.  A lot of gold is above-ground but the gold FLOAT is relatively low.


Wed, 06/26/2013 - 13:40 | 3695864 NotApplicable
NotApplicable's picture

As always, price is set at the margins by the active players.

Wed, 06/26/2013 - 20:15 | 3697347 Whiner
Whiner's picture

Almost a verity, NA. But not forever or maybe not beyond Christmas.

Wed, 06/26/2013 - 13:32 | 3695809 James_Cole
James_Cole's picture

what happened to that silver mine that collapsed and and took all that supply with it. Nothing makes sense.

If you ignore silly articles like this it makes sense. If you look at the market in context of this type of sell-side bs, yeah it doesn't make any sense. 

Until eventually virtually no gold will be produced.

^ case in point. 

Hey, what was the spot price of gold in 1998? But but.. that's unpossible!!

What about silver? That must've been above 25$ throught the 90s right?? Unpossible!!

Wed, 06/26/2013 - 13:42 | 3695874 ParkAveFlasher
ParkAveFlasher's picture

gold = orange juice



(for the ironically challenged.)   

Gold isn't a commodity, is it?  



(for the rhetorically challenged)

Wed, 06/26/2013 - 14:22 | 3696090 cifo
cifo's picture

In '98 gas was $1 a gallon, now it's $3+. In '98 a bread was $1, now it's $2+. I hope you get the point.

Wed, 06/26/2013 - 15:07 | 3696271 James_Cole
James_Cole's picture

In '98 gas was $1 a gallon, now it's $3+. In '98 a bread was $1, now it's $2+. I hope you get the point.

Totally separate issue but all the same, even with this dumb comparison try the math.

Take gold and silver from 1998 (~300$ ~5$) and double or triple them. 

Remember though, this article is about CASH COSTS relative to price not inflation. The later is again, a separate issue which you've mistakenly conflated. My point was the avg cash costs are clearly way higher than they should be and the spot price relative to them has no bearing historically. 

Wed, 06/26/2013 - 20:36 | 3697406 CPL
CPL's picture

That's implying the dollar has any value.

Wed, 06/26/2013 - 21:41 | 3697572 jerry_theking_lawler
jerry_theking_lawler's picture

you are making an assumption that gold gains in productivity/efficiency are the same as gas and bread increases in productivity/efficiencies.....i doubt they are as gold gets harder and harder to find and produce......

Thu, 06/27/2013 - 01:09 | 3698142 James_Cole
James_Cole's picture

I'm not making that assumption, I pointed out it was a dumb comparison. 

Wed, 06/26/2013 - 15:09 | 3696306 eclectic syncretist
eclectic syncretist's picture

The price for a gallon of gas has went up an average of 9.5% per year for over a decade, as you can see in the 11 year chart here.

The FedGov finds this truth inconvenient though, so the BLS calculates CPI based on the laughable assumption that only 5% of the average americans income is spent on gas.

Thu, 06/27/2013 - 00:52 | 3698111 Flagit
Flagit's picture

Gold isn't a commodity, is it? 



Wed, 06/26/2013 - 13:45 | 3695899 Bay of Pigs
Bay of Pigs's picture

The Kennecott mine in Utah is the worlds largest copper mine and produced 16% of annual US silver.

"The total US mine output for silver in 2012 was 1,050 tons for 2012 or 30.6 million ounces, and US gold production was 230 tons,  meaning Rio Tinto’s Kennecott accounted for upwards of 16% of total US silver supply, and 5% of US gold supply"

Fuck you James for throwing around such misleading bullshit. You're a disgraceful buffoon on this subject.

Wed, 06/26/2013 - 13:52 | 3695944 James_Cole
James_Cole's picture

Rio Tinto’s Kennecott accounted for upwards of 16% of total US silver supply, and 5% of US gold supply

^ how's that fit into your worldview? From the guys who constantly write pro gold articles on here. 

Wed, 06/26/2013 - 14:02 | 3695998 Bay of Pigs
Bay of Pigs's picture

I wouldn't expect any less of you as a MSM shill and PM troll.


Wed, 06/26/2013 - 14:45 | 3696188 Meat Hammer
Meat Hammer's picture

He cites Wikipedia.

Nuff said

Wed, 06/26/2013 - 15:38 | 3696290 James_Cole
James_Cole's picture


He cites Wikipedia.

Go ahead and show the inaccuracies in their production numbers - they're cited from the usgs. Or let me guess, usgs is also a bs source? Where do silver doctors get their numbers from?


Just checked, Silver doctors links to the SAME usgs surveys lol

US gold production was 230 tons < click on that from the silver doctors page and you'll see the same report cited from wiki, a year earlier but same report


Wed, 06/26/2013 - 15:50 | 3696507 A. Magnus
A. Magnus's picture

Ummm USGS is a FUCKING GOVERNMENT AGENCY; since government is nothing more than the dominant form of organized crime for a location and population, ALL of its numbers are suspect....

Wed, 06/26/2013 - 17:06 | 3696779 James_Cole
James_Cole's picture

K fair point, throw out what silver doctors writes too though because they're basing it on the same studies. 

And throw out this article, as it's also based on .gov statistics (used by the banks). Actually, better just throw out almost everything zh writes as they often cite studies using .gov numbers (both critically and uncritically).

Infact, turn off your computer right now and set it on fire as it's mechanics are based in part on .gov research - not to be trusted!! Oh shit, do you live somewhere? I wouldn't be surprised if .gov had something to do with your plumbing, electicity etc. Better just burn the house down. And move to the woods.

Oh no, hold up. Do you eat food? Was it purchased at a supermarket? Is your local forest on planet Earth? Oh gawd, we're going to have a problem here!!

Wed, 06/26/2013 - 19:02 | 3697161 HedgeHammer
HedgeHammer's picture

WIKIPEDIA being your main source speaks volumes in my book.

Wed, 06/26/2013 - 14:33 | 3696130 fuu
fuu's picture

"Hey, what was the spot price of gold in 1998? But but.. that's unpossible!!

What about silver? That must've been above 25$ throught the 90s right?? Unpossible!!"

Disingenuous strikes again!

Wed, 06/26/2013 - 13:38 | 3695851 DoChenRollingBearing
DoChenRollingBearing's picture

fonz, FOFOA's logic (which I subscribe to) is that the stock:flow of gold is so high that even if ALL the mines shut down that would not influence short-term prices (except, I suppose, psychologically) much.  So, I agree with your observation!

Mines are the "weakest hands" in gold, they HAVE to sell (whatever the price) to keep functioning.

FOFOA made the point a few months ago that even more important for a higher future price of gold than when the public starts buying is when the sellers STOP SELLING.  That is when we see prices rocket..., no gold for you!

So, that is what I am watching for.  Central banks buying, not selling.  When the sellers disappear, and there is NO physical gold, that is when the fireworks start...  When will that happen?  I don't know, nor even the mighty FOFOA, but, he feels it may be close now.

Wed, 06/26/2013 - 13:56 | 3695963 NotApplicable
NotApplicable's picture

Is FOFOA still high on the (can't hyperinflate because it's marked to gold but Westerners are too stupid to understand that) Euro?

It be nice to see him adopt a coherent viewpoint on this subject, as otherwise I fully agree with Another's ideas. Then again, the whole thing seems to be but a Fabian fabrication, relying upon the incoherent wishful thinking surrounding fiat currencies, pretending that gold (or any other tangible asset) cannot stand on it's own.

It's like they've taken the best parts of a gold standard and tied the albatross of fiat around its neck, because, as social "improvers" they only know how to pervert nature, rather than embrace it.

Wed, 06/26/2013 - 15:46 | 3696491 DoChenRollingBearing
DoChenRollingBearing's picture

FOFOA's take on the Euro is the hardest part of his ideas for me to understand, although I am not sure you are charcterizing his Euro position correctly.  

That does NOT mean (of course) that he thinks the Euro price of gold will not skyrocket too...  While, I think he builds a very logical case for a very high gold reset price, neither he (or worse, me) can predict the future.  Especially me!  I have a terrible short-term prediction track record.

Exhibit A: recent (paper) gold prices...

Wed, 06/26/2013 - 16:30 | 3696652 Ghordius
Ghordius's picture

FOFOA's and the EUR's concepts on what he calls "freegold" - i.e. a recipy of free flow of gold and a gold-backed, not price-fixed and not-national currency are similar, yes. actually, they are fairly well based on the monetary experiences of the 19th Century

not that the EUR is being driven nicely, or that the road is smooth, but yes, the design is still sound. it could even survive sovereigns jumping down, by now, but except from throwing up they are all hanging in

in short: EUR loves Au - without wanting to cramp it's style - not so USD, who first married Au and then... inprisoned it

Wed, 06/26/2013 - 14:55 | 3696252 toothpicker
toothpicker's picture

Nobody's selling gold. Everybody's selling paper. Huge difference, especially since our beloved regulators don't care about naked shorting IN THE PM SECTOR

Wed, 06/26/2013 - 16:00 | 3696558 JuliaS
JuliaS's picture

I'm selling at last summer's prices. Care to buy?

Wed, 06/26/2013 - 22:19 | 3697703 chindit13
chindit13's picture

Don't know if you've caught the latest news, but there is no such thing as naked shorting in futures markets.  Why, even an apartment-dwelling New Yorker of a faith that proscribes the consumption of pork is more than welcome to sell a car or two of bellies if he has enough dosh in his account.

Wed, 06/26/2013 - 22:32 | 3697754 Al Huxley
Al Huxley's picture

Sure, long as he's willing and able to deliver said bellies if called upon to do so.

Thu, 06/27/2013 - 03:18 | 3698301 fiftybagger
fiftybagger's picture

"Don't know if you've caught the latest news"  But you apparently have never heard of bullion banks.

Wed, 06/26/2013 - 15:18 | 3696343 Toronto Kid
Toronto Kid's picture

Sellers aren't going to stop selling gold when there is a banking crisis in the home country. The US needs China to stop stockpiling gold. Best way to force China to do that is manufacture a banking crisis.

So they send Snowden off to Hong Kong after revealing things that were already known. The Chinese take the bait and throw the NSA hot potato over to Russia. This gives the tech dept the excuse to test the strength of the BoC's firewall. BoC has a glitchy day, which turns into a bit of a stampede with the local Chinese. The resulting kerfuffle has 'em all selling gold with China suddenly far too busy to challenge the current holders of the reserve currency.

I never believed Snowden revealed what he did because he found his conscience.

Wed, 06/26/2013 - 15:49 | 3696503 DoChenRollingBearing
DoChenRollingBearing's picture

+ 1 for remarkable creativity!  Hey, could be!

Thu, 06/27/2013 - 04:39 | 3698362 e-recep
e-recep's picture

a bit too creative methinks.

Thu, 06/27/2013 - 00:14 | 3698038 buyingsterling
buyingsterling's picture

China has essentially endless purchasing power to buy gold. The US isn't capable of forcing them to disgorge it. As for Snowden, he went to where he didn't think the host government would be bullied into turning him over to the US. There are tens of thousands of private tech guys working for the NSA in similar capacity to Snowden - none of them can develop a conscience? As for it being widely known, I guess I missed the ABC/NBC/CBS/CNN series on the subject. Judging from the public reaction, I'd say it was not widely known. Available, yes, known, no.

Thu, 06/27/2013 - 01:16 | 3698150 Flagit
Flagit's picture

that is when the fireworks start...  When will that happen?  I don't know, nor even the mighty FOFOA, but, he feels it may be close now.

fireworks are scheduled to begin just after dusk, around 9:00 pm.

Wed, 06/26/2013 - 22:02 | 3697644 disabledvet
disabledvet's picture Bingham Canyon. "biggest mining collapse in US history." luckily everyone saw it coming and was working there when it happened. the folks in Indonesia weren't so lucky. there are billions of ounces of silver... time to jump ship from precious metals to economics and recovery. the "quants" have done it again. "they follow a trend right up the point that 90% have already and long ago abandoned ship." in this case we're talking commodities and "inflation trading." prepare for blow ups as "the Fed Chairman was surprised by the response."

Wed, 06/26/2013 - 13:41 | 3695870 BandGap
BandGap's picture

Inventory? You have to be shitting. If I owned a gold mine I would sit on the inventory until the price rose. When mines shut down due to the costs of production I am willing to bet they warehouse the inventory, assuming they don't have outstanding bills due.

Wed, 06/26/2013 - 13:51 | 3695936 fonzannoon
fonzannoon's picture

Or assuming they don't work for Jamie Dimon.

Wed, 06/26/2013 - 15:08 | 3696302 Herd Redirectio...
Herd Redirection Committee's picture

They do have outstanding bills due, and debt to pay off, unfortunately.

But I think miners would be WELL ADVISED to stockpile their physical at these prices, and use it as collateral, as opposed to selling (at this point in time). 

Wed, 06/26/2013 - 15:28 | 3696415 francis_sawyer
francis_sawyer's picture

The paper pushers now want to own gold mines...


Push the price down so far which will put as many Jr. miners out of business as you can & print yourself up some BLUE BUCKS to take them over... Then, open for business...

No fucking different from the housing market, [or 'farms' back during the Great Depression]...

Wed, 06/26/2013 - 15:41 | 3696462 espirit
espirit's picture

@ francis

I'm with you on that track...

Wed, 06/26/2013 - 16:03 | 3696559 francis_sawyer
francis_sawyer's picture

Not to disgrace 'Toronto Kid's' offering [above]... It had a lot of creativity... But 'pound for pound', it's too complicated...


These MF'ers aren't that smart... [& they always... ALWAYS... seem to dust off old playbooks]...

The playbook is simple...

- If you control the money supply, you can do anything you want...

- Maybe you 'predict' this or that about the future, but maybe it doesn't go your way [very 'often', in fact, because most of these fucks are so sheltered they haven't any clue whatsoever on chaos theory]

- so for them, it's all about spin control

- no bother, if they get caught off balance [as was CLEARLY the case in the QE n+1, dynamic]... Just use the 'money printing dynamic' to alter the outcome in their favor


There are so many examples of this:


Hubris: "Permanently high plateau" [just before 1929 stock market crash]

Reaction to error: foreclose on the farms, confiscate gold


Hubris: to infinity

Reaction to error: blow housing bubble


Hubris: "Subprime is contained"

Reaction to error: Foreclosuregate + QE n+1


Hubris: King Dollar

Reaction to error: Let's bankrupt all the gold miners & take over production [before KING DOLLAR dies]




Wed, 06/26/2013 - 16:10 | 3696592 Bay of Pigs
Bay of Pigs's picture

Thx francis. Well said. Spot on.

King Doelarr. RAHRAH...

(h/t Mr Lennon Hendrix)


Wed, 06/26/2013 - 16:51 | 3696722 Debugas
Debugas's picture

very great comment

'If you control the money supply, you can do anything you want"

but it has one if - you can always inflate but to deflate you need masses to be in high enough debt

Wed, 06/26/2013 - 17:44 | 3696898 francis_sawyer
francis_sawyer's picture

You don't need to deflate everything... Just what you want to control... Meanwhile ~ keep the everyday living costs like food, shelter, fuel high enough so that the masses stay poor...


Supposedly, in a REAL dynamic, the 'market' would take care of everything... There would be overbuilding, which would force consolidation, & the strong hands would come in & buy on the cheap... In these FAKE markets, all you need to do is push & leverage paper around to achieve the dynamic you want... It doesn't mean that it's NOT going to produce unintended consequences... But you REACT to those unintended consequences with money printing & another avalanche of paper...

I'd put most of my chips on the idea that these PM smackdowns are a result of them finally realizing that the PETRODOLLAR is finished [& their hubris led them to be wrongfooted going in]... After it finally turns around [which means there are no PM's anywhere to be found], they'll let the pendulum swing back & make it all look like they were 'geniuses' again by buying when there was blood in the streets [like our HERO 'Teleprompter' who courageously told everyone that 'PROFIT TO EARNINGS' looked good when Citi was at $1]... All he was doing was telling you what his handlers [bankers] told him to say, which was, we're going to print ourselves TRILLIONS to re-capitalize ourselves, survey the damage, & go shopping...

I guess 'homeschooling' teaches you a few things...

Wed, 06/26/2013 - 21:17 | 3697511 walküre
walküre's picture

yup, that's why we homeschool our heirs

Wed, 06/26/2013 - 15:55 | 3696525 DoChenRollingBearing
DoChenRollingBearing's picture

@ francis_sawyer

+ 1

Yes, I believe that is true as well, among other reasons why the paper pushers want the paper gold price down.  Yo, if I could buy Osisko's Malartic Mine (article posted a few days ago) at a cheap price, I would...  At a cheap price!  But, since I am not a rich (pope-wise or otherwise), I'll just stick to physical gold and bearings...

Wed, 06/26/2013 - 22:24 | 3697710 El Tuco
El Tuco's picture



Peoples resources are limited. The price can rocket all it wants but your not going to find people buying it at 5000 an ounce. The average guy isn't going to pay that. I know I wouldn't. At that point I would find other investment vehicles to hedge against worthless paper.

When inventory runs out people just aren't going to buy it. Plain and simple. there is a limit to everything and if you can afford gold at 5k an ounce then you really don't need it because you already have more then 99.9 % of the world.......

I got nothing against gold but I find that people just don't get it. they think demand will be infinite and they will sell their gold for 5 k an ounce....please.....what you going to sell it for the new dollars?

To much gold fever...not enough common sense.....

Ask someone from the eastern front what people did with their gold....they would trade a ring for a potato. So get yourself some potatoes if you really think it's all going to hell in a hand basket.....

Sorry just rambleing here but who the fuck is going to take dollars for gold anyway? You think anyone wants to get stuck with worthless fiat....

Just saying....

Wed, 06/26/2013 - 23:34 | 3697956 CPL
CPL's picture

Exactly.  And that's how it all gets rebooted.  People find other things to trade in.  Light bulbs, screws, bolts, doors, pipe, chairs, lumber.  Want to see how that economy works.


Weirdly no money swaps hands, just ideas and education, people being people and sharing up something interesting they figured out.  If you read the comments section the 'build it cheap and well' is a badge of honour and occasionally runs competitions.  Participants detail how they recycled something into something else or improved on something.  Every subject is present.  From making a movie to knitting your dog a hat.  Then you've got the 'marketplace', which is a bunch of people gathering to swap stuff.

Wed, 06/26/2013 - 18:16 | 3697039 WhiteNight123129
WhiteNight123129's picture

Well Check ACHL LN, orange plantation trading at the cash on the books only, 8.3% dvd yield, Free cash Flows to the neck.


Wed, 06/26/2013 - 22:57 | 3697843 prains
prains's picture



My computer has a damaged disk and am unable to install the newest OS on it so went to repair the disk and did a check on permissions out of curiosity and this came back; Open error 5: " Input/Output error" on Applications/ The part saying >>>>>  zh_TW.proj  has me stumped,perplexed and a bit freaked out can you explain any of this ??????? thanks

Wed, 06/26/2013 - 13:23 | 3695747 therover
therover's picture

Fucking dog food is expensive ! I love my dog, so he does get the good stuff, but DAMN !

Wed, 06/26/2013 - 13:30 | 3695799 greatbeard
greatbeard's picture

>> dog food is expensive

Tell me about it.  I'm paying $75 per bag for my dog's food, and $2.50+ per can for his wet food.  The cat's food has gone from $.40 to $.65 per can.  In return I get all the love I can handle.  Not a bad deal, but don't tell me there's no inflation.

Wed, 06/26/2013 - 13:38 | 3695854 beaker
beaker's picture

I feed mine Atta Boy. 50# for $18 at Costco. They still love me and are in great shape for older dogs. Just sayin....

Wed, 06/26/2013 - 14:07 | 3696019 greatbeard
greatbeard's picture

>> I feed mine Atta Boy.

Like people, every dog is different.   I went through a long, and emotionally painful, process of watching my dog suffer through food allergies.  I'd watch him lay around for days, only gettng up to go outside and shit drops of blood.  Through trial and error I finally found a food he can tolerate.  He is my best friend, and really, the best friend anyone could ask for.  I don't piss away money on food for him because I'm a flippant idiot.  Same goes for me, really, I can't tolerate garbage food.  I live on a very tight budget and everything I spend get's a frugal going over.  But when I comes to food, for me, or my pets, or my family and friends, I don't mind spending what it takes to get quality.  You are given but one temple and it's best to maintain it as best you can.

Wed, 06/26/2013 - 15:11 | 3696318 Herd Redirectio...
Herd Redirection Committee's picture

I love my dog, so he gets lots of exercise.  Food?  He gets the generic stuff, and I give him some milk (or cheese if he is lucky) on top.  He'll go on 6 hour hunger strikes some times, until I add milk/leftovers/etc.  Like a damn terrorist!

Wed, 06/26/2013 - 15:12 | 3696326 Harbanger
Harbanger's picture

What are you going to do for your pet if you can't buy the right dog food in an economic crisis?  Poor thing will starve. I thought you were an outdoor selfsufficient kinda guy.  I don't think my dogs ever ate dog food.

Wed, 06/26/2013 - 15:22 | 3696385 greatbeard
greatbeard's picture

>> Poor thing will starve.

If he did we'd go together.  Just like my own grub, I keep a pretty good stockpile of food for him.  If it gets to the point I can't order his food anymore, we'd have more to worry about than his diet.  We're typically set to go for months with no resupply.  City folks are usually set to go for days, maybe. 

What is it you feed your dog?

Wed, 06/26/2013 - 15:31 | 3696426 Harbanger
Harbanger's picture

"If he did we'd go together." Dude, you love your pet a little too much.  I love my dogs too but I don't view it as a human.  Mans best friend means he's with you on the hunt and protects the pack.  If you're looking at an animal literally your best friend, it's a little twisted.  I never have a dog live less than 17 years unless he was hurt on the trail, rusty lived to 20 even though he was blind for the last 2 yrs.  They eat what I eat which is homegrown meat and vegetables.

Wed, 06/26/2013 - 15:41 | 3696461 greatbeard
greatbeard's picture

>> you love your pet a little too much.

Guilty as charged. 

Wed, 06/26/2013 - 15:46 | 3696490 espirit
espirit's picture

What's love got to do with it?

I like animals much more than most people, especially my two JR terriers.

Wed, 06/26/2013 - 16:11 | 3696594 Straw Dog
Straw Dog's picture

Up vote for JR Terriers

Wed, 06/26/2013 - 23:58 | 3698001 Braverdave
Braverdave's picture

Boston Terriers here.

And I like and love Rusty and Oogy better than any other creatures walking this earth.

If he isn't hungry enough to eat them himself old Rusty brings me quails and mice quite often and Oogy is learning to chase them too but for him it's mostly just for fun :)


Wed, 06/26/2013 - 22:25 | 3697732 Maos Dog
Maos Dog's picture

Umm, as pack leader, My dogs will KILL OR DIE FOR ME WITHOUT HESITATION.

You can't love these guys too much. 

Wed, 06/26/2013 - 18:10 | 3697023 Serenity Now
Serenity Now's picture

Dogs can eat rice, especially when they are sick.  I'm not sure if they can survive on it long term, though.  Five cents per serving.  

Wed, 06/26/2013 - 16:04 | 3696569 Boozer
Boozer's picture

I am insane for my pup!  Dirty buzzard is lying on the couch beside me while I

get my daily dose of ZH.  Needless to say he gets the good stuff.

Wed, 06/26/2013 - 14:00 | 3695985 NotApplicable
NotApplicable's picture

We supplement with canned tuna, or should I say, canned water. Many times the cans aren't half full by the time I've taken the water out (cats don't like wet cat chow).

Wed, 06/26/2013 - 14:19 | 3696080 greatbeard
greatbeard's picture

>> supplement with canned tuna,

Watch for pink salmon to go on sale.  CVS and Walgreens have it under $2 a can.  The dogs and cats love it.  I do the tuna thing also.  It wasn't that long ago you could pick up canned pink salmon for under a buck.

I have a long, and fascinating for some, story about watching salmon seiners clean up a bunch of hatchery salmon just outside of Valdez AK.  We were camping on a high bluff overlooking the sound and were able to watch the whole process up close.

Wed, 06/26/2013 - 14:36 | 3696145 ThunderingTurd
ThunderingTurd's picture

Everyone should spend a week in the Prince William Sound at least once in their life.  It is truly an amazing place.  We have family in Cordova...just down the coast from Valdez.

Wed, 06/26/2013 - 15:05 | 3696282 greatbeard
greatbeard's picture

I have to agree.  I've been twice.  This last vist was in an RV, 27,000 mile round trip from South Florida to Fairbanks and back, with a good bit of tooling around the desert SW and Northern Canada.  We spent 2.5 months on the Seward water front camping and about three weeks across from Valdeez.  Absolutely stunning. 

Wed, 06/26/2013 - 15:08 | 3696301 ThunderingTurd
ThunderingTurd's picture

My cousin runs a salmon/halibut commercial outfit in Cordova.  I go every spring for opening weekend to help.  That is one heck of a drive!

Do NOT follow this link or you will be banned from the site!