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Citi: "No Gold Company... Will Generate Free Cash Flow At Current Gold Prices"
After updating their precious metals' company cost curve, Citi's ominous warning that, "a combination of rising unit costs (15% yoy), sustained high capital budgets and a falling gold price have resulted in a fast contraction in margins - so much that no gold company under our coverage will generate Free Cash Flow at spot gold."
Via Citi,
Companies are trying to adjust by cutting capex, exploration and corporate costs. But we also notice that most of the global gold cost curve is burning cash at spot levels. Further cuts are needed in the coming 12 months to make ends meet.
We view this as a return to normal for global gold equities. Given the ‘price taker’ nature of the industry, the next decade will see high-cost asset disposals, reduced capital budgets, lower exploration expenditure and balance sheet recapitalisation as companies try to survive in a lower gold price environment...
Or,
...as China seems to be showing the world, we will see supply reductions occurring at the same time as the rolling over of 'peak suppression' of the gold price and the precious metal will realize its real fiat-numeraire-based value.
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aka Gil I hear you. At the extreme, maybe we see a Canticle for Liebowitz scenario but instead of high tech, the people destroy every vestige of the fractional reserve and usury system that destroyed and I do mean destroyed them. Interesting times.
i cant believe im about to say this, but, it appears we are awaiting the return of jesus to dispose of the money changers, once again.
J2: the con, is on.
Believe me, whenever some thick-fingered, moneychanging shyster cunt tries to talk PMs down, I'm a buyer. I don't care how much money I lose. In fact, I prefer it. I buy PMs out of hatred and spite, and for that reason alone, PMs will ALWAYS be in a bull market for me...
+++++++++++++
You're even more extreme than I am!
Pride in yourself and in your actions. This is something money can't buy.
Fuck them all. I'll keep buying till my last breath, because it's heavily underpriced. If I don't live long enough to harvest the earnings, my children will.
It would make little difference to the economy if every primary gold producer shut down and the only gold was by product of other metal mining. The effect would be an escalating gold price due to supply drop but so what? They keep telling us that it is a useless relic. What fools we hedgies be. The money printers could safely ignore us if they really thought we were wrong, but instead they seem obsessed with our choices.
Yep, like someone reacting very defensively to a comment, the way gold, silver and miners have been treated the last couple months is very telling.
Almost like someone is saying "Sell this stuff, please!"
I ain't selling any miner stock. If it goes to $0, so be it. It's better to burn out than to fade away.
So sorry for them, the shares are falling into strong hands more and more. Almost all the weak holders are gone, and we're set for a short squeeze.
Maybe not tomorrow, maybe not next week. But I can sit on my shares and wait. Fuck them.
who cares ? They could all go bust...
Ten bucks says the government requires registration of physical gold held reasonably soon.
I can't decide if it's bullshit that during 9/11 there was a huge gold theft. Ditto for Khaddaffi's gold... I only know what I read on the interwebs and I don't trust the Alex Jones types any more than the Corporate/Zio media - I read for a different perspective.
Anyway, if the gold was stolen, government spooks and TBTB went through an awful lot of trouble... and if true... seems very likely anyone who bought physical gold with any sort of transaction trail is going to be asked, nicely at first, to give it over to the government sooner or later....
Syria is not in the news all of a sudden. I assume that means Obama sent a few more brigades to the border with Jordan.
"nicely at first"
We are experiencing a shakedown right now. Its possible the gov't asks people to relinquish their gold for the good of the country (!) in exchange for USD. But I don't think they can do more than that. Physical confiscation? Impossible on any sort of scale. You would have to raid everyone simultaneously, because once people catch wind...
>> the gov't asks people to relinquish their gold for the good of the country
They could always offer them a price that would encourage them to sell, you know, for the good of the gold holders.
A price in funny paper? No thanks.
Let's gain a little perspective on this. The value of all gold held by individuals in the USSA is absolute chicken feed. It probably wouldn't fund the federal government for a week. In fact, it can't fund the federal government at all, because they'd have to turn around and spend the gold, which they can't, unless you mean buy back US federal government bonds from China with gold.
Which is why I floated the idea 2 or 3 weeks ago in ZH that the purpose of driving gold as far down as possible, then confiscating gold, is to purposely cause as much harm to their political allies as possible. And let's be honest, gold lovers definitely TEND to be individualists, anti-authoritarian, anti-tyranny. If the predators-that-be are getting close to overt moves against the population, they definitely want to remove as much resources from their enemies as possible. And trashing the price of gold just before the confiscate would certainly do that fairly well. And all it costs them is spending a bunch of fiat that costs them nothing to create.
An executive Order to confiscate gold would be illegal. Executive orders may only be used to enforce or clarify existing law. There is a defacto law on the books signed by Ford that makes gold ownership legal by US citizens anywhere in the world. It simply can't be done without a huge legal mess. Challenged in court, it would fail. I would not turn in anything.
From Wiki:
Until 1952, there were no rules or guidelines outlining what the president could or could not do through an executive order. However, the Supreme Court ruled in Youngstown Sheet & Tube Co. v. Sawyer, 343 US 579 (1952) that Executive Order 10340 from President Harry S. Truman placing all steel mills in the country under federal control was invalid because it attempted to make law, rather than clarify or act to further a law put forth by the Congress or the Constitution. Presidents since this decision have generally been careful to cite which specific laws they are acting under when issuing new executive orders.
And:
The limitation on gold ownership in the U.S. was repealed after President Gerald Ford signed a bill to "permit United States citizens to purchase, hold, sell, or otherwise deal with gold in the United States or abroad" with an act of Congress codified in Pub.L. 93–373,[18][19][20] which went into effect December 31, 1974
Quin . . . . I must say I don't share your confidence: "Challenged in court, it would fail."
You mean, like all the eminent domain abuses the court allows to occur, Obama's sick-care legislation passed by Supreme Court (in)Justice Roberts, etc?
Remember, the black-robed ravens who constitute "the court" ARE NOTHING MORE THAN FEDERAL GOVERNMENT BUREAUCRATS. They are not going to bite the hand that feeds them, especially with the NSA black-mailing them at every juncture.
We are living in an era where the law is what "they" say it is. Justice is NOT part of the equation. Period. Full Stop.
As I recall, a famous ZH ex-Army spook who served in Iraq, was Simon Black.
Maybe he can comment on the Iraqi millions and gold?
I also recall reading articles on $600M that we found, and that tons (literally) of ancient Sumerian relics were plundered. It was probably way more in reality, but our guys no doubt 'secured' that booty. Again... Simon?
I have a lot of credit cards with zero balance at the moment. How about MOAR digitz? You guys buying that debt are a bit silly. Do you really think we are going to pay you back?LOL
A cash machine that accepts the virtual currency bitcoin is set to be distributed around the globe this summer, according to its maker Lamassu, which expects pre-orders for the technology to be placed soon.
Does the closure of Mt Gox dampen your spirits for bitcoin?
they are back.
http://blogs.wsj.com/moneybeat/2013/07/05/bitcoin-operator-mt-gox-resume...
I love this price action. My dollar cost average keeps getting lower and lower on an asset that can never go to zero and is recognized world wide as money.
In the same way accounting rules have been debased, they will try to debase physical measurements. The new OZ will be one tenth the size of the old OZ.
Amazing how easy running the world is...
i am feeling that way about miners. i just but them for the fuck of it at this point. Maybe in twenty years they will be up ten fold.
It certainly is easier to accumulate physical metal today than it was two years ago, although I rarely see TPTB make a recommendation to do that. I suppose they can keep the paper selling going for a while longer, but at some point there will be a low and boy will this low offer the opportunity of a lifetime.
So if it becomes that costly to mine PMs, and exploration is cut down, wouldn't that limit the available physical supply and drive prices back up again?
Yes... If we were not living in the Bizzaro investment world...