Have We Reached 'Peak Gold'?

Tyler Durden's picture




 

Led by countries such as Russia and China, central banks have recently become net buyers of gold. Meanwhile, ETF gold outflows have been a temporary source of supply this year, but obviously this cannot persist. It’s also unreasonable to assume that recycling will make up a significantly greater piece of supply without the price of gold increasing substantially. With the grade of current producing gold mines being 32.6% higher than undeveloped deposits, it makes the supply scenario even more clear. Not only is the current yearly mine supply difficult to sustain, but future mines coming online will be challenged by grade and margins to be economical at today’s prices. Mathematically, unless we have high-grade, high ounce deposits that are being fast tracked online, it will be very difficult to find a way to get supply to match demand. Have we reached peak gold?

 

(click image for large legible version)

 

And The Full Natural Resource Holdings' 40-page Global Gold Mine and Deposit Rankings report is available here

 

Global Gold Mine and Deposit Rankings 2013

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Mon, 11/25/2013 - 19:42 | 4189211 VD
VD's picture

i don't know about gold, but i do know we are nowhere near peak stupidity.

Mon, 11/25/2013 - 19:42 | 4189213 Crash Overide
Crash Overide's picture

This is when the fun starts, when everyone runs to get theirs and there is none to be gotten.

Mon, 11/25/2013 - 19:49 | 4189236 knukles
knukles's picture

There's a stupididty shortage?

Mon, 11/25/2013 - 20:03 | 4189274 Rubbish
Rubbish's picture

I was going to pick up a couple oz's tomorrow (planning a month now) and you stupid fucks don't let me in at the bottom. Up two days in a row...

 

Hour drive away, have to be there anyway so, tomorrow I stack, but can you please not buy anymore till Wedsnesday.

Mon, 11/25/2013 - 20:19 | 4189307 NoDebt
NoDebt's picture

This article is covered in the stench of "fundamentals", which, as we all know, are like Kryptonite to this market.  They're shunned, reviled, disputed, but mostly encased in lead and shoved off into a dark corner where they are roundly ignored.

Mon, 11/25/2013 - 20:50 | 4189349 DoChenRollingBearing
DoChenRollingBearing's picture

@ NoDebt  

Yes, gold's fundamentals are being ignored.  On the other hand the Stock:Flow of gold is so high that ALL gold mining could be shut down, say, for a year or two without a radical price move (excepting other Black Swans or psychological effects of mine shutdowns).

http://fofoa.blogspot.com/

FOFOA is VERY long reading.  I would start in late 2009 there at his blog.

AFAI am concerned, he is the top analyst out there, and he believes gold will go to "$55,000".  Even Jim SInclair is on board with an eventual $50k gold when the "paper gold" burns (is shown to be worthless, and physical is all that counts).

Mon, 11/25/2013 - 20:52 | 4189365 lasvegaspersona
lasvegaspersona's picture

DCRB

you know this but Ill reiterate:

What is being sold and what is pricing gold is PAPER. Apparently paper is in stock as they never seem to run out. As long as there is some physical moving, then paper will continue to price the market.

btw GLD inventory is down another 3 tons, now less than 850 tons. It was 1350 in January.

Some of the world's gold supply is coming from GLD.

If this sprott chart is correct ( and we continue at this rate) we will be out of supply in months! THEN it will be fun to hold physical.

http://sufiy.blogspot.co.uk/2013/11/china-india-turkey-and-thailand-buyi...

Mon, 11/25/2013 - 21:33 | 4189445 MeelionDollerBogus
MeelionDollerBogus's picture

just in time for the new 3500 peak & following dip to 2500 in the next 18-24 months

Mon, 11/25/2013 - 22:20 | 4189521 Keyser
Keyser's picture

Sprott made that same prediction recently, although he called for $3500 by next summer. 

Every time PM's get monkey-hammered like they did this morning, it only strengthens my resolve in owning physical PM's. You don't just dump 1500 sell contracts on the market at once. Then do it repeatedly over time. There is a lot of fear of the ancient relic by the banksters. 

Mon, 11/25/2013 - 20:58 | 4189378 DavidPierre
DavidPierre's picture

 

Big week ahead...pieces of the puzzle ... the Art of War.

The holiday shortened Thanksgiving week looks like it could be an important one. The Dec COMEX month is upon us and there are only 3 days left before first notice with 126,000 contracts still outstanding. This translates to 12.6 million ounces which will surely shrink over the next 3 days but the question is "by how much"?

This is an important question because there are only 589,000 ounces held by dealers in the registered category.

We had a similar situation last December and the COMEX brought in a million ounces to make delivery. From that point forward the inventories have bled a gusher, COMEX total Gold has gone from 11.5 million ounces to about 7 million while the dealer side has dropped from 3.5 million to under 600,000 ounces, the latter is a roughly 80% bleed. GLD which is another "source" for metal has dropped from 1,300 tons to about 850 over the last 12 months. We are also aware of a 1,300 ton "shortfall" in the inventory held by the BOE. These large decreases in inventories are now well documented and this metal has moved "East" to China, India, Russia and others. This is just one piece to the puzzle.

It will be quite interesting to see just how many contracts actually stand for delivery. The obvious "potential" is that "too many" stand and ask for Gold that is simply not available to deliver. This would be an obvious catastrophe. The "timing" is also quite interesting because we learned this week that 23 nations have now set up "non Dollar" swaps to be used to settle trade. The big question now is whether or not the Saudis will accept anything other than Dollars. The current negotiations with Iran could very well be the blasting cap that sets this whole thing in motion, Saudi Arabia (and Israel) will be hopping mad if a deal gets done that turns out to be a "bad deal".

The "timing" was interesting, it is, VERY! ... because late yesterday Jim Sinclair wrote publicly that he has been in meetings regarding the origins of "cash" metals markets. He had spoken previously of 6 different metals exchanges that would afford no leverage whatsoever and declared yesterday that he has made the decision to back the Singapore Physical Precious Metals Exchange with his knowledge, reputation and financially. Jim's message to the us can be found here http://www.jsmineset.com/2013/11/22/my-mission-on-our-behalf/ .

He has accepted the position of executive chairman of the exchange so without a doubt his heart and soul is in this for the end game.

For those of you have studied or wondered about "Free Gold", this is how it begins. True "cash and carry" exchanges will destroy the West's ability to price Gold using leverage and unbacked contracts. Currently there is virtually "no cost" for JP Morgan, Goldman, Barclays, Morgan Stanley or any other investment house to "sell" Gold. All they need to do is "push a button" and literally millions of so called ounces hit the markets and thus push the price down. "Cash exchanges" will offer the opportunity to arbitrage metal from the paper exchanges.

We will arrive at a "two tier" market in Gold and Silver.

In some respects we have already. India is currently paying 20% above paper Gold market prices to obtain metals. There are also premiums (though not nearly as high) for the Chinese to buy Gold. Here in the U.S., Silver Eagle and Maple pricing is some 15-20% above COMEX pricing. (Interesting to note that though prices dropped this week on the COMEX, premiums expanded by the same amount leaving cash prices nearly unchanged). So yes, we already have a glimpse at a "two tier market" but if I had to guess, these cash exchanges will "arbitrage" the remaining metals held in the West. They will buy and ask for delivery knowing full well that they can sell to cash buyers in the East at far higher prices...thus making an arbitrage profit AND draining the remaining scraps at the bottom of our barrel.

THIS is truly big news!

It inevitably had to happen sooner or later because Mother Nature has been demanding it for years. This "cash and carry" concept will ultimately reprice Gold and Silver to much higher levels and probably multiples of their current prices. The West has been fighting the tide since 1971 and now looks to have lost the war with this current battle arrangement. The East on the other hand has acted in harmony with nature. They were patient and methodical for years upon end and now look to end the "financial war" without ever firing a single bullet. Let me remind you that history has shown that the winners of war end up with the losers Gold, it has always been this way. However, this "war" was different. The East used our own "bullets" (Dollars) against us by producing product, selling that product to the West and earning more "bullets"...which have been used to "buy" our Gold.

We have no one to blame other than ourselves because we sat back and allowed this to happen. Don't get me wrong, this was "planned", it was planned by the Chinese years and years ago. In the words of Sun Tzu in his book of military strategy 'The Art of War' .... "The supreme art of war is to subdue the enemy without fighting". This is essentially what has been, is and will happen.

Gold is gone, it will soon be "priced" by those who "have it".

http://www.lemetropolecafe.com/

 

Mon, 11/25/2013 - 21:04 | 4189393 Thisson
Thisson's picture

First, it doesn't matter how much gold there is because gold is an accounting mechanism.  If the world only had 1 ounce of gold in it, it would still be useful as money (we would just need to use very small units, like Bitcoin uses the Satoshi).

Second, it doesn't matter if COMEX "defaults."  Those paper contracts are subject to the US legal system, and in the US legal system you are not entitled to specific performance (e.g. actual gold).  If the contract is breached, you are entitles to CASH ONLY.  That's FIAT cash (note that when the exchanges originated, gold WAS cash!). 

Mon, 11/25/2013 - 21:31 | 4189413 Flakmeister
Flakmeister's picture

You take yourself far too seriously given that your thought procresses appear to be purely dogmatic...

That being said, you are correct vis a vis COMEX...

Mon, 11/25/2013 - 21:43 | 4189459 Papasmurf
Papasmurf's picture

COMEX is settled in fiat in the event the contract cannot be fulfilled.  You cannot sue for specific performance.  It's not clear what the effect of failure to deliver would be.  Paper gold should go to zero in this event, but physical metal is tied at the hip so far.  There is no problem getting physical at coin stores like there was when gold was above $1800.  The 20% premium in India is the result of capital controls, not open markets.

I would like to read some articles on the con side of gold.  The bull consensus here is concerning.

Mon, 11/25/2013 - 23:14 | 4189631 Flakmeister
Flakmeister's picture

I am becoming convinced that is it become completely commoditized like Silver...

The price is now down to pretty much the cost of production and it has slid against basically all consumed commodities...

I wish the fuck I had dumped my holdings a ways back...

Tue, 11/26/2013 - 14:52 | 4191240 Thisson
Thisson's picture

Thank you for your welcome comment Papasmurf.  The con side of gold is that gold is sensitive to interest rates, and if you believe that rates will increase, that would have a bearish impact on gold.  Alternatively, if you expect deflation and ZIRP forever, that would be bullish for gold.

Mon, 11/25/2013 - 22:46 | 4189571 Agstacker
Agstacker's picture

"Two Tier" market is already here in the US, take a look on ebay on the prices of gold and silver coin and bullion, most of it has a substansial premium.

Tue, 11/26/2013 - 00:02 | 4189734 augustusgloop
augustusgloop's picture

DoChen - 

+1 for turning me on to FOFOA, I think a year ago now.

Mon, 11/25/2013 - 21:29 | 4189436 MeelionDollerBogus
MeelionDollerBogus's picture

faster than a speeding hunt-stop algo, it's COMEX-man, the Man of Tungsten!

What better stuper-hero to fight off barbarous relics!

Mon, 11/25/2013 - 21:06 | 4189397 Freddie
Freddie's picture

If you like your stupidity, you can keep your stupidity.

Mon, 11/25/2013 - 21:37 | 4189451 DoChenRollingBearing
DoChenRollingBearing's picture

Stupidity: Soon to be individually mandated!

Mon, 11/25/2013 - 22:38 | 4189558 Keyser
Keyser's picture

But it has electrolytes!!! 

 

Mon, 11/25/2013 - 20:21 | 4189310 silverserfer
silverserfer's picture

I will ALWAYS be able to drive 40 min. set up my sluice and get about a gram in an afternoon. And i'm in a beautiful setting with friends and family in the mountians. At least expenses are covered. Better that being a putz at a shopping mall or sitting on my ass watching sports.

Mon, 11/25/2013 - 23:27 | 4189662 Trucker Glock
Trucker Glock's picture

You're 40 minutes from where exactly?  And I mean exactly.  :)

Sun, 12/01/2013 - 13:15 | 4203623 TheMerryPrankster
TheMerryPrankster's picture

yield is approx 12-15k per year if you work 365 days. That doesn't seem all that rich, you could just about pay for the gas to drive the 40 miles and the food and heat/elec for your home.

The exercize is probably a good thing though.Might want to check upstream and seee where the rest of the gold is lodging.

Mon, 11/25/2013 - 20:02 | 4189269 Jannn
Tue, 11/26/2013 - 00:45 | 4189790 Radical Marijuana
Radical Marijuana's picture

Indeed, VD!

Only two things are infinite, the universe and human stupidity, and I'm not sure about the former.

The difference between stupidity and genius is that genius has its limits.

--- Albert Einstein

P.S.

http://www.youtube.com/watch?v=Bz-4NQ65Vxw

Peak Gold

Commodity based money does not change
that money is ultimately backed up by
murder, or the real death controls.

AS DEMONSTRATED BY:

http://www.cbc.ca/player/Shows/Shows/Doc+Zone/ID/2380466502/

The Secret World of Gold

30 SECONDS INTO THAT DOCUMENTARY, IT STATES:

Gold has always kept company with murder and intrigue.

Nobody that I am aware who promotes return to using precious metals as the standard for honest, sound money, ever has satisfactorily explained how that would not still suffer from the paradox of enforcement, that nobody guards the guardians.

I define "money" as measurement backed by murder, into which context fits all of the other definitions of money, most of which deliberately ignore and deny the facts that prove my definition is the only adequate one to explain those facts. The problem of "peak gold" fits into the overall pattern of pretty well peak everything else (except for human stupidity, which appears to have no limits.) As far as I can tell, there is nothing which is going to stop human beings from continuing to operate with evil deliberate ignorance, (i.e., stupidity) towards the limits of exponential growth. Therefore, we appear to be headed to run as fast as we can into the wall of the real limits to the natural world, which we continue to deliberately ignore, as much as well can, and will probably do so for as long as we can ... After hitting that wall, we may bounce off the edge of cliff, which is the consequence of stupidly ignoring that exponential growth reaches limits of its peak possibilities very fast, until it becomes too little, too late to recognize that, since we will have already overshot way too far at that point.

The real world operates on exponential growth of "money" made out of nothing, as debts, in a globalized fiat money fraud, backed up by weapons of mass destruction. Meanwhile, almost everyone deliberately ignores the utter insanity and irrationality of that situation, because it was based on the long history of backing up lies with violence, that has succeeded in creating systems of legalized lies, backed by legalized violence, in which the paper forms, or electronic representations of "gold," are about 100 times greater than the actual physical gold. Furthermore, almost everything else follows the same pattern, where the "money" made out of nothing to gamble with is orders of magnitude greater than all the real collateral, because, what actually keeps those frauds going is force, and the force to keep those frauds going are weapons of mass destruction which could kill orders of magnitude more people than are actually living. Given those facts, clearly, the only thing which is nowhere near having peaked is human stupidity!

Our collective achievements, through the combination of backing up lies with violence, causing the survivors within that system to believe in bullshit, and generally behave in psychotic ways, has been the source for making the human species become stupider, and stupider, since those who benefit from the frauds then keep on getting even more able to back those frauds up with force, and therefore, the human species as a whole becomes stupider and stupider, due to that runaway social insanity situation, without any limits to that within the foreseeable future!

Mon, 11/25/2013 - 19:42 | 4189212 knukles
knukles's picture

Couple of months ago I was enjoying a cuppa in the sun and overheard a few chaps (couldn't help but overhear as were talking openly) a few of whom I recognize, and they were talking about gold prices.  How it was going Down.  And they were right.  Since then its been unpleasant.
BUT....
The reason they were discussing was all fucked up.  That "we're gonna go bring some asteroids back to earth and mine all the gold from 'em"

Jesus....

Mon, 11/25/2013 - 19:43 | 4189215 Crash Overide
Crash Overide's picture

Isn't Richard Branson looking into asteroid mining already?

Mon, 11/25/2013 - 19:45 | 4189221 knukles
knukles's picture

Methinks he's also been in on the unlimited free energy plan during the investigation stages.

"But Captain, we've not got enuf power"

Mon, 11/25/2013 - 22:40 | 4189560 Keyser
Keyser's picture

What do you expect, he's from the "better liviing through chemistry" generation. 

 

Mon, 11/25/2013 - 19:44 | 4189216 VD
VD's picture

was this outside a JHS or the gov handout office?

Mon, 11/25/2013 - 19:48 | 4189231 knukles
knukles's picture

Local coffee shoppe, older geezers (oppps, I'd better watch throwing that term about anymore)  

Big cars smelly wives

Mon, 11/25/2013 - 20:00 | 4189259 VD
VD's picture

big cars, smelly wives and small ideas. perfect! was it Starfux perchance?

Mon, 11/25/2013 - 20:06 | 4189284 OldPhart
OldPhart's picture

We Geezers don't go to Starfux...coffee there is too damned expensive.  We remember coffee at a nickle a cup.  No fucking way are we going to pay over $4.00 for some faggity named candified coffee.

 

Mon, 11/25/2013 - 22:50 | 4189580 Agstacker
Agstacker's picture

My coffee is Folgers, 240 cups for 9 bucks.  

Mon, 11/25/2013 - 23:04 | 4189612 Mine Is Bigger
Mine Is Bigger's picture

I am so sorry.

Tue, 11/26/2013 - 00:05 | 4189743 Diogenes
Diogenes's picture

But it's Folger's Crystals.

Mon, 11/25/2013 - 21:19 | 4189422 Freddie
Freddie's picture

older geezers

Oh a couple of old retard baby boomers or senior scammers who are scamming social security driving in their Little Rascal three wheel carts paid for by Medicare.

Typical moronic shit from old retards thinking they will mine asteroids. Typical baby boomer TV generation Star Trek fan bullshit.

The death panels and Soylent Green await.

(sarc)

Mon, 11/25/2013 - 19:52 | 4189242 Race Car Driver
Race Car Driver's picture

> That "we're gonna go bring some asteroids back to earth and mine all the gold from 'em"

Yeah ... just set it down in the desert, over there, Jim. Nice and easy ... all 20,000,000 tons. Nice and easy ... .

Mon, 11/25/2013 - 19:56 | 4189248 Son of Captain Nemo
Son of Captain Nemo's picture

If indeed your story is authentic, please tell us there is a part II to this story?

You will seek them both out tomorrow and bludgeon them to death.

 

Mon, 11/25/2013 - 20:08 | 4189287 Zero Point
Zero Point's picture

No need. They'll be bludgeoning each other soon enough.

Mon, 11/25/2013 - 21:10 | 4189403 YHC-FTSE
YHC-FTSE's picture

Been a lifelong sci-fi fan so I quite like the idea of space exploration.  When prices go up,  it might just be economically feasible to mine asteroids for PMs. Funny thing about innovation - where there's a need, somebody will squeeze out a solution, so I wouldn't rule out cheaper ways to go into space. Of course the dollar has to collapse, gold price has to skyrocket,  and NASA/MIC who have tried to have monopolize space will have to disappear to enable free thinkers and entrepreneurs to find viable solutions that don't cost billions to install a toilet on the ISS. 

Http://uk.mobile.reuters.com/article/idUKBRE9AK0JF20131121?irpc=932

Mon, 11/25/2013 - 22:30 | 4189537 Freddie
Freddie's picture

Yeah right.  Elon Musk will figure it out because he is a "genius."  (sarc)

Mon, 11/25/2013 - 22:49 | 4189581 Keyser
Keyser's picture

Correctomundo and part of the reason that over 6000 US patents have been seized by the Federal government in the name of national security. The technology exists, but is being kept from the human race. Imagine what unlimited, free energy would do to the economic base built on fossil fuels. Yes, it would be a huge benefit, but it would put the entire energy industry out of business, along with the accompanied unemployment and loss of $$$ to the elites that own those sectors.

Tue, 11/26/2013 - 00:09 | 4189754 Diogenes
Diogenes's picture

You realize they will have to reinvent space exploration from scratch? You know all those historic missions to the moon? NASA seems to have thrown out all their records. Now it is impossible to analyze or investigate the original moon shots.

Mon, 11/25/2013 - 19:45 | 4189219 Racer
Racer's picture

All long as they have fake paper gold their actions will  put the mines out of business (indirectly and as a result of their panic to keep the lid on real gold)

Mon, 11/25/2013 - 19:45 | 4189222 Sufiy
Sufiy's picture

Great post Tyler! Now lets put into this perspective record amount of Gold flowing to China, India, Thailand, Turkey ....


Chinese Gold Demand And The World Gold Council’s Estimates


  Alasdair Macleod provides very good explanation for the difference between Eric Sprott calculations and WGC estimates, which are dramatically underestimating the real demand for Gold from China this year. http://sufiy.blogspot.co.uk/2013/11/chinese-gold-demand-and-world-gold.h...

China, India, Turkey and Thailand Buying Record Amount of Gold - What Do They Know The Others Don't? GLD, MUX, TNR.v, GDX

Mon, 11/25/2013 - 19:48 | 4189229 Cacete de Ouro
Cacete de Ouro's picture

Long gold paint ... and gold ink

Mon, 11/25/2013 - 19:47 | 4189234 Flakmeister
Flakmeister's picture

Demand appears to be met from the West melting all of their scrap jewelry... The final evisceration of American savings....

Non-Asian marginal demand appears to zero..

Finally, let me know when I can buy 20 barrels of oil for a kruggerand, I think that will not be the case for a long time, if ever again...

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