This page has been archived and commenting is disabled.

Gold Drops Below Cash Cost, Approaches Marginal Production Costs

Tyler Durden's picture





 

As we showed back in April, the marginal cost of production of gold (90% percentile) in 2013 was estimated at between $1250 and $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 $1125... Of course, should the central banks of the world succeed in driving the price of gold to or below its costs of production (repressing yet another asset class into stocks) then we fear the repercussions will backfire from a combination of bankruptcies, unemployment, and as we have already seen in Africa - severe social unrest (especially notable as China piles FDI into that region).

 

 

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, Yellen, or 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.
Mon, 12/02/2013 - 20:36 | Link to Comment MrSprottJr
MrSprottJr's picture

Now, at the risk of being unpopular, this reporter places the blame for all of this squarely on YOU, the viewers.

Mon, 12/02/2013 - 20:39 | Link to Comment Al Huxley
Al Huxley's picture

LOL

Mon, 12/02/2013 - 20:44 | Link to Comment SMG
SMG's picture

Oh Zero Hedge, you and your "reality".  Like that has anything to do with markets today.

Now tommorow maybe you've got something. 

Mon, 12/02/2013 - 20:53 | Link to Comment dryam
dryam's picture

"supply and demand"?

I'm not familiar with that phrase.  It seems like I heard it a long time ago.  I think it had something to do with economics a long time ago.

Mon, 12/02/2013 - 20:57 | Link to Comment AllThatGlitters
AllThatGlitters's picture

Little bounce here...

Live Spot Gold Chart: http://www.pmbull.com/gold-price/

Looks weak, like it can't follow through. Which is why it probably will.

Chart looks dead to me, so expect a sudden surge higher.

Mon, 12/02/2013 - 22:02 | Link to Comment Pladizow
Pladizow's picture

Mines should remain open, as its more costly to close and reopen when higher gold prices return, then continue to sell at a temporary loss.

Mon, 12/02/2013 - 22:12 | Link to Comment Squid-puppets a...
Squid-puppets a-go-go's picture

well, we're gettin on 6 months now at costprice levels. How much fuel you think these mines got in the tank? 'specially when their trustees and shareholders look at the nominal returns being had elsewhere

Mon, 12/02/2013 - 22:17 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

These are not the droids you're looking for.

Mon, 12/02/2013 - 22:56 | Link to Comment OneTinSoldier66
OneTinSoldier66's picture

"supply and demand"?

I'm not familiar with that phrase.  It seems like I heard it a long time ago.  I think it had something to do with economics a long time ago.

 

I don't understand the price of Gold. I don't think anybody does.

 

Now, do I get a job with the Federal Reserve?

Mon, 12/02/2013 - 23:37 | Link to Comment Debugas
Debugas's picture

people buy gold when they do not want to spend their money but simply want to park their savings.

It makes gold prices very hard to predict because noone really knows what the needs of everyone else are

Tue, 12/03/2013 - 01:44 | Link to Comment Four chan
Four chan's picture

in the light of the world wide fiat explosion, pms are cheap at any price, which is nice.

Tue, 12/03/2013 - 02:50 | Link to Comment fonestar
fonestar's picture

All PMs are not created equal.  I wouldn't be surprised to see gold fall further as Bitcoin catches on and silver has more utility than gold.

Tue, 12/03/2013 - 03:59 | Link to Comment Doña K
Doña K's picture

http://takimag.com/article/bitcoin_goes_pro_christoph_hargreaves_allen

Exerpt from the above article:

" BTC’s rapid growth, combined with a paucity of virtual currency regulation in China, has led to the commission of fraud only a week after the announcement that BTC China had conducted a record number of transactions globally:

GBL, a Chinese bitcoin trading platform that claimed to be based in Hong Kong, recently shut down – an event that might not be worthy of note had ¥25m ($4.1m) worth of users’ money not disappeared with it.

Speculation and fraud. Sounds like the real world to me."

 

Many happy returns mates

 

Tue, 12/03/2013 - 05:54 | Link to Comment Occident Mortal
Occident Mortal's picture

I have been buying gold and selling the DJIA for a few days now.

 

Purely on account of this technical pivot in the long term data.

 

Buy - http://i40.tinypic.com/2e5v1p1.png

Sell - http://i40.tinypic.com/2n9dylc.jpg

 

The fact that these key levels are being tested simultaneously and on crumbling volume is very significant. 

 

Now is the time to make the trade that everyone has been talking about for the past 5 years.

Tue, 12/03/2013 - 06:53 | Link to Comment negative rates
negative rates's picture

Plus the Alaskan boys are shut down from a lack of light.

Tue, 12/03/2013 - 07:37 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

We can't give Germany it's gold back because it's too cheap at the present time......maybe try back in a couple weeks.

 

We thank you for your understanding and patience.

Tue, 12/03/2013 - 09:46 | Link to Comment Its_the_economy...
Its_the_economy_stupid's picture

Price is irrelevant. It demand that must be controlled. 7 years just spreads out demand over a long enough timeline that Fed buying to meet delivery won't spike demand or meet a market that cannot deliver.

Tue, 12/03/2013 - 05:31 | Link to Comment chaartist
chaartist's picture

Don't you see a settlement issue with Bitcoin? you are playing very stupid ponzi game in my opinion backed by nothing. The soooner you get your cash out the better.

 

http://www.offgridminds.com/misinformation-blog/2013/12/2/bitcoin-timefr...

 

 

Tue, 12/03/2013 - 06:54 | Link to Comment negative rates
negative rates's picture

I would.

Tue, 12/03/2013 - 02:56 | Link to Comment Freddie
Freddie's picture

All part of the plan fro the banks to take over or own the mines or miners.

Tue, 12/03/2013 - 04:20 | Link to Comment Doña K
Doña K's picture

TPTB have been burning tones of newly created cash to push down gold pricing. That in itself forces the miners to hedge by shorting the price of gold. Thus, if the output is worth less after is mined, they make up the difference in paper gains and they are at equilibrium with expectations.

This suppression method that draws the participation of miners creates the downward spiral. However, there are limits to such extremes and once these limits are reached, Bernanke will be right that he does not know how the gold price works. He also cannot see bubbles.

We are FED-up with you slimy bastards.

 

Tue, 12/03/2013 - 08:15 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

That gold crap is worthless.....have some freshly printed paper.....it's still warm and has pretty colors.

Tue, 12/03/2013 - 03:37 | Link to Comment Bay of Pigs
Bay of Pigs's picture

Hey Plad, when do you become such a dumbfuck on gold anyway?

After you bought BTC?

Tue, 12/03/2013 - 04:12 | Link to Comment papaclop
papaclop's picture

Screw JP Morgan. Buy silver, buy all you can afford because it is deeply discounted due to criminal banksters.

Mon, 12/02/2013 - 21:04 | Link to Comment TheHound73
TheHound73's picture

Cash-for-gold still doing brisk business. Pawn shops picking up slack from miners. Intrinsic value holding steady at $300.

Mon, 12/02/2013 - 22:03 | Link to Comment Beam Me Up Scotty
Beam Me Up Scotty's picture

I would rather have a one ounce eagle with a face value of $50 and an intrinsic value of $300 than a $100 paper fiat Ben Franklin with an intrinsic value of $0.

Mon, 12/02/2013 - 23:18 | Link to Comment TheHound73
TheHound73's picture

So say we all.

Tue, 12/03/2013 - 02:56 | Link to Comment Babaloo
Babaloo's picture

How right you've been for the last year!

Mon, 12/02/2013 - 21:54 | Link to Comment TheHound73
TheHound73's picture

.

Tue, 12/03/2013 - 05:13 | Link to Comment ebworthen
ebworthen's picture

"Supply and demand" means gold should be at $12,250/ounce.

But that would be with the rule-of-law and without utterly corrupt central banks.

Tue, 12/03/2013 - 04:20 | Link to Comment RingPeace
RingPeace's picture

I don't get it. I've been reading ZH and other sites for years trying to understand it all, but I can't. None of it makes sense.

Good news = sell. Bad news = buy.

Cure debt with more debt.

Pump ga-zillions of cash into the economy and the gold price goes down.

The signs of the economy recovering are lower wages, higher unemployment and more 'benefits' to an ever growing society in relative poverty; with even higher 'benefits' to the richest people on the planet.

I guess we are in the 'Twilight Zone'.

Mon, 12/02/2013 - 21:06 | Link to Comment CashCowEquity
CashCowEquity's picture

Kent Brockman?

Mon, 12/02/2013 - 21:22 | Link to Comment LetThemEatRand
LetThemEatRand's picture

 

Kent Brockman: "Excuse me, did you see the six o'clock news?"

Comic Book Guy: "No, I get my news from the internet, like a normal person under seventy. Farewell, dinosaur."

Tue, 12/03/2013 - 00:17 | Link to Comment Downtoolong
Downtoolong's picture

Hey I get it, but, what more does MrSprottJr the reporter want from me. I just bought some silver today. If it ever becomes worth 1000 ounces of gold, I'll do the physidcal swap faster than an HFT algo.

 

Mon, 12/02/2013 - 20:36 | Link to Comment Larry Dallas
Larry Dallas's picture

BTFD!!!

Tue, 12/03/2013 - 03:34 | Link to Comment fockewulf190
fockewulf190's picture

I will.  Me thinks this latest smashdown is targeted directly at those gold contact holders standing for delivery.  The claxions are aauuuging louder than hell over at the Comex because they don´t have the gold to deliver, so they want cash settelments....NOW.  Phone calls were made, strings pulled, favors called upon, anti-gold rants on CNBS are commencing.  The bullion banks don´t give a flying fuck about the miners. It´s all about putting out the inferno before the Comex blows up and defaults, because if it does, gold goes to the moon.

Tue, 12/03/2013 - 07:09 | Link to Comment Squid-puppets a...
Squid-puppets a-go-go's picture

inasmuch as china clearly sees this particular ruse, this tactic serves only to light their own fuse

Tue, 12/03/2013 - 08:11 | Link to Comment fockewulf190
fockewulf190's picture

Might be the case, but desperate times call for desperate measures.

Mon, 12/02/2013 - 20:37 | Link to Comment MrSprottJr
MrSprottJr's picture

Time to crack open everyone's brains and feast on the goo inside !!!

Mon, 12/02/2013 - 20:36 | Link to Comment XAU XAG
XAU XAG's picture

they can have mine at $50,000 per oz

 

Pun intended!

Mon, 12/02/2013 - 20:41 | Link to Comment SHEEPFUKKER
SHEEPFUKKER's picture

In Weimar, you would have been begging for bread within 24 hours if you did that. 

Mon, 12/02/2013 - 21:20 | Link to Comment 2bit Hoarder
2bit Hoarder's picture

they can have mine for 100 acres per ounce ...

Mon, 12/02/2013 - 20:38 | Link to Comment Al Huxley
Al Huxley's picture

Well, they insist on letting their competitor, who's production cost is 0, set the price in the industry, what the fuck do they expect?  Let them go dark, stupid fuckers.

Mon, 12/02/2013 - 21:06 | Link to Comment new game
new game's picture

i might add; cost of "fwd" production hedged in the "wrong markets".

debts a bitch bitcheez.

deserve what they get.

Mon, 12/02/2013 - 22:07 | Link to Comment RaceToTheBottom
RaceToTheBottom's picture

Agreed.  The only tactical mistake nearly as bad would be squandering that advantage by letting GLD price drop so low that "real" economic forces must drive it back up.

 

Imagine how "they" felt when Gold was 300$?  It is good that we have had no inflation.... Whew....

Mon, 12/02/2013 - 22:23 | Link to Comment Squid-puppets a...
Squid-puppets a-go-go's picture

the gold price in the next few months will be telling. If it drops lower such that many mines close, it means there is no secret agreement between TPTB and china, and they are just hammering gold to delay the disorderly collapse. if they allow it to maintain or rise a little to keep the mines open, it remains suggestive of facilitating the physical flow to the east

Tue, 12/03/2013 - 02:28 | Link to Comment philipat
philipat's picture

Agreed. What they SHOULD do is form a Cartel, just like the Bullion Banks have.

Mon, 12/02/2013 - 20:37 | Link to Comment Banjo
Banjo's picture

nonsense paper gold will do the trick

Mon, 12/02/2013 - 20:38 | Link to Comment max2205
max2205's picture

GDX got smoked today

Mon, 12/02/2013 - 20:48 | Link to Comment El Hosel
El Hosel's picture

GDX has been in a relentless nose dive since $55 last October ( 2012 )...  Bent over and pounded, one throbbing red candle after another. 

Mon, 12/02/2013 - 21:10 | Link to Comment Martel
Martel's picture

The biggest red candle has been saved for the final round. No lubing, fiat monkey has you. It's on like Donkey Kong, gold bitchez.

Mon, 12/02/2013 - 20:39 | Link to Comment nmewn
nmewn's picture

Oh noes, no supply leads to scarcity!

I'm ruined!!! ;-)

Mon, 12/02/2013 - 20:38 | Link to Comment John___Connor
John___Connor's picture

Keep buying all the way down to zero guys. Oh, but the comex will default any minute now. Yea, you have been saying that for years. Did I mention my BTC is +10% today? 

Mon, 12/02/2013 - 21:41 | Link to Comment Tinky
Tinky's picture

Wow. The days when you contributed reasonably intelligent posts now seem so far away.

Mon, 12/02/2013 - 22:06 | Link to Comment John___Connor
John___Connor's picture

Yes, because sounding intelligent on ZH is more important than protecting one's wealth. 

Tue, 12/03/2013 - 03:41 | Link to Comment Bay of Pigs
Bay of Pigs's picture

No, you're a stupid fucking asshole when it comes to gold John. That much is clear.

Troll on bro...

Tue, 12/03/2013 - 03:57 | Link to Comment Clowns on Acid
Clowns on Acid's picture

Well when BitCoin collapses you will accomplished neither ....

Tue, 12/03/2013 - 08:53 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

No problem. After that.....we'll just reap the wind.

Tue, 12/03/2013 - 15:09 | Link to Comment Amagnonx
Amagnonx's picture

Im just as bullish as anyone on BTC and have made a good chunk on it, but at these prices silver is a screaming buy - and though I own more than my car can carry, I think its time to buy more.

 

It will be fascinating to see the attempt to get gold and silver to zero though - lets see how that turns out!

Mon, 12/02/2013 - 20:39 | Link to Comment RafterManFMJ
RafterManFMJ's picture

And yet gold is still below my marginal cost of purchasing. Go figure.

Mon, 12/02/2013 - 20:42 | Link to Comment El Hosel
El Hosel's picture

No big deal, JPM is helping the Fed give the Germans a lesson in Gold trading. You want your gold back? Ok, but you will have to wait while we destroy the market for it. 

Mon, 12/02/2013 - 20:49 | Link to Comment disabledvet
disabledvet's picture

"first launch the satellite into geo-synchronous orbit successfully. then add the two boosters--take your moonshot. next turn all of Los Angeles into a Solar City. Don't forget the car either. This is America...we all get the car in the end. After that report to Hollywood for the screening...i think we've got the critics on this one. We'll handle the rave reviews. If it sucks there's always the sequel." Any questions? Good. Get to work people! Get to work!

Tue, 12/03/2013 - 01:14 | Link to Comment disabledvet
disabledvet's picture

what was the story again? oh, yeah...that shiny lump of crapola. YOU GUYS GET TO WORK ON THAT TOO!

Mon, 12/02/2013 - 20:42 | Link to Comment Al Huxley
Al Huxley's picture

By the way, in the 'new reporting normal' an inability to supply demand in a market is reported as a DECREASE IN DEMAND, not a supply shortage - I kid you not, Reuters, Bloomberg, etc.  have reported 'demand is down significantly in India due to an inability to bring enough gold into the country' (because of the governments actions to attempt to reduce gold imports).

Mon, 12/02/2013 - 20:46 | Link to Comment nmewn
nmewn's picture

lol...kinda like not having enough toilet paper in Columbia, its simply a decrease in demand! ;-)

Mon, 12/02/2013 - 21:51 | Link to Comment RaceToTheBottom
RaceToTheBottom's picture

Not to mention a lot of people walking around with sour looks on their faces and clenched sphincters....

Mon, 12/02/2013 - 22:55 | Link to Comment DaddyO
DaddyO's picture

...something about trying to drive a needle up their butts with a sledgehammer, eh?

DaddyO

Mon, 12/02/2013 - 23:53 | Link to Comment Jorgen
Jorgen's picture

The problem with the toilet paper has been in Venezuela, not Colombia.

Tue, 12/03/2013 - 00:07 | Link to Comment Tall Tom
Tall Tom's picture

You are mistaken. The problem with the Toilet Paper has been here in the United States of America. We are so stupid here that we trade it everyday as Currency when the only functional value that it has is ass wiping.

 

Why do you think that cashiers wear gloves? Got change for a Twenty?

 

It just makes no sense to flush good currency down the toilet when you just can spend it afterwards. Nobody has slipped you a Stinkin Lincoln?

Tue, 12/03/2013 - 02:29 | Link to Comment zhandax
zhandax's picture

Twenty is change.

Tue, 12/03/2013 - 02:54 | Link to Comment CCanuck
CCanuck's picture

Twenty is change....

Without hope

Tue, 12/03/2013 - 00:16 | Link to Comment Oleander
Oleander's picture

What effect will this have on toilet paper along the border? Will these problems leak into other South American countries?

Will we see runs on toilet paper in neighboring countries?

Tue, 12/03/2013 - 02:47 | Link to Comment Jorgen
Jorgen's picture

Toilet paper shortages seem to be endemic to the communist system. They had this problem in the ol'USSR as nicely pictured in the movie "Moscow on the Hudson", starring Robin Williams:

https://www.youtube.com/watch?v=GR0I3DgWXX8

(The looong line are people waiting to buy toilet paper)

Tue, 12/03/2013 - 08:55 | Link to Comment StychoKiller
StychoKiller's picture

"Have a McNice day!"

Tue, 12/03/2013 - 09:30 | Link to Comment kill switch
kill switch's picture

nmewn,

 

Another gem!!!

 

I find autumn leaves work well..

Mon, 12/02/2013 - 20:42 | Link to Comment disabledvet
disabledvet's picture

So all the gold has now left the GLD "ETF"...and still the paper price declines. Hmmmm. This sounds an awful lot like a paper tiger...that in fact isn't a paper tiger. http://www.youtube.com/watch?v=bxjwQ9g62Mo

Tue, 12/03/2013 - 01:16 | Link to Comment disabledvet
disabledvet's picture

What? You mean you wanted the "I'm the lumberjack and I'm okay" song but for gold miners instead?

Mon, 12/02/2013 - 20:46 | Link to Comment buzzsaw99
buzzsaw99's picture

oh noes, then the world will run out of gold. ROTFLMAO

Mon, 12/02/2013 - 20:48 | Link to Comment 0b1knob
0b1knob's picture

Gold mining won't stop because the selling price is below the production cost.   Look at nat gas, the production cost of fracked gas is about $7 while the current market only pays $3.50.   They are still drilling wells anyway.   No one will abandon their sunk capital cost.   Especially not when they can borrow money at near zero percent.

ZIRP is causing all sorts of bad investments.   This will not end well.

Mon, 12/02/2013 - 21:58 | Link to Comment Matt
Matt's picture

You just need to generate enough in sales to service your debt payments. Profit margins are so old school.

Mon, 12/02/2013 - 22:12 | Link to Comment zerozulu
zerozulu's picture

Rules of economics do not work when money is, Ctrl-P.

Tue, 12/03/2013 - 03:40 | Link to Comment Gief Gold Plox
Gief Gold Plox's picture

This actually makes a lot of sense. I've been told that mining operations do not actually stop regardless of the current spot. Only deliveries at that prices levels are cancelled.

Tue, 12/03/2013 - 10:04 | Link to Comment AGAU
AGAU's picture

'Only deliveries at that prices levels are cancelled' - Have you a source for this?

My theory is that one or all of the following is true:

The miners have hedged against low metal price, therefore the spot price has no bearing on whether mining continues.

In my opinion it's likely that Goldman Sacchs control the boards of the large mining companies, maybe they'll allow the share price to go to zero and then organise a bailout for them?

I'm thinking it could be 10 years before I sell my AG, it would be sold for it's value as a commodity rather than a monetary metal unless there is a replacement for AG in electronics in the mean time.

How far will TPTB go in guaranteeing supply and surpressing demand/price? Will they ban the purchase of investment silver through taxation?

Mon, 12/02/2013 - 20:48 | Link to Comment seek
seek's picture

It's going to be fun watcing TPTB squirm trying to figure out how to sell low-priced forward contracts locking in prices below production cost to shuttered mining operations worldwide.

I doubt the mines are going to be really eager to lock in when the price is rising enough for them to go online. Hopefully they wise up the next go-round.

Mon, 12/02/2013 - 21:19 | Link to Comment fonzannoon
fonzannoon's picture

They won't need the miners for a while. Right now they have countries getting ready to barf up their reserves to buy their citizens some icrap and shut them up for a few weeks.

Mon, 12/02/2013 - 22:02 | Link to Comment CoonT
CoonT's picture

Striking visual there "Barf up their reserves." That gets my +1 of the day.

Don't spend it all at once, but if you're going to....I heard that Quark is going to be Bitcoin's #2. Wink wink

Tue, 12/03/2013 - 07:02 | Link to Comment negative rates
negative rates's picture

Execpt that a wearhouse is empty, until proven full. Hence fiat currencys that compete against each other and are both leverage with the same reserves. Which is then swapped for full faith and credit and lent out at zero rates so the capital vultures can charge 14-50% inorder to more easily separate the middle class from it's money. Works good until it dosen't.

Mon, 12/02/2013 - 20:50 | Link to Comment YHC-FTSE
YHC-FTSE's picture

"If you've done 6 impossible things this morning,  why not round it off with breakfast at Milliways?".

I would count buying gold at less than marginal cost as an impossible act, so I guess it's time book that table. With all the demand for physical,  empty vaults, debased currencies,  and global apprehension at the economic shitstorm around the corner,  what we are currently witnessing is completely impossible in a free market. Ergo, we are not in one. The psychotic megalomaniacs at the helm of fiat currency, particularly the reserve currency, can be seen clearly for what they are: criminals who have stolen the wealth of nations to suit their ilk. 

Mon, 12/02/2013 - 21:04 | Link to Comment Redneck Hippy
Redneck Hippy's picture

I thought the central bankers were driving UP the price of gold by debasing all that currency.  That's what I was told at ZH.  Oh wait, that was last year. 

Mon, 12/02/2013 - 22:01 | Link to Comment taraxias
taraxias's picture

No, that's not what you were told.

What you were told and didn't understand is that central bankers are debasing their currencies IN RELATION TO EACH OTHER while at the same time manipulating gold lower.

Tue, 12/03/2013 - 01:17 | Link to Comment resurger
resurger's picture

Yup! All other nations are pussies except for Germany of course.

Imagine if the Mericans were alone in printing, how much gold would have been trading today?

Ja Ja JA!

Tue, 12/03/2013 - 01:13 | Link to Comment LetsGetPhysical
LetsGetPhysical's picture

ZH isn't wrong, they're early. lol.

Mon, 12/02/2013 - 20:54 | Link to Comment Ness.
Ness.'s picture

I figure I might as well just burn my gold in the trash barrel, oh wait... can't do it.  That relic is STILL there... just taunting me.  

Mon, 12/02/2013 - 21:02 | Link to Comment mobydick
mobydick's picture

Why don't these generally poor gold producing countries petition the US and British Governments to clean up this crooked gold paper market which is burying their industries.

Mon, 12/02/2013 - 21:04 | Link to Comment Al Huxley
Al Huxley's picture

Ha ha ha!  Wow, good one - yes, these poor countries should appeal to the US and British governments, who have such a stellar track record of taking on industry to help out the poor, resource producing countries.  Oh, just a second, I left the dog in the chicken-coop to keep an eye on the chickens and I hear some kind of a ruckus out there- he must be fighting off intruders...

Mon, 12/02/2013 - 21:21 | Link to Comment Ness.
Ness.'s picture

Mining gold is hard, dirty work.  Not meant for bankers.  We are just going to mine 101001010101110101's.  Much easier.

Mon, 12/02/2013 - 22:09 | Link to Comment CoonT
CoonT's picture

"Mining gold" USED TO BE hard, dirty work. The fact is that there just aren't that many real miners around anymore; least not in the Western world anyways. Now it's just a bunch of frat-boys pushing whatever buttons the computer program tells them to.

 

Tue, 12/03/2013 - 03:41 | Link to Comment RmcAZ
RmcAZ's picture

Oh, you mean Bitcoin? Or Litecoin? Or is it WorldCoin? Peercoin... Namecoin...

Mon, 12/02/2013 - 21:02 | Link to Comment JLee2027
JLee2027's picture

I predict COMEX will drive the price far lower. Under 1000, under 800, etc. Anything to kill the idea of GOLD as money.

Mon, 12/02/2013 - 21:05 | Link to Comment magnetic_silver...
magnetic_silver_ideas's picture

Did you ever correctly predict anything before this prediction?

Tue, 12/03/2013 - 09:08 | Link to Comment GetZeeGold
GetZeeGold's picture

 

 

He's dating Jon Nadler's second cousin....and that's good enough for me.

Tue, 12/03/2013 - 02:33 | Link to Comment Mrs. Haggy
Mrs. Haggy's picture

Fine, but when?  That's what I need to know.

Mon, 12/02/2013 - 21:04 | Link to Comment magnetic_silver...
magnetic_silver_ideas's picture

BUT NSA should be on top of it though... no worries....

we found all the missing children using PRISM... and now we're about to reboot the mainframe to apply our Windows updates... then we will load our new GISM software to locate those bullion bars..

Mon, 12/02/2013 - 21:04 | Link to Comment greatbeard
greatbeard's picture

Clearly this take down has been in the works for years.  How many years now have the miners been shorted into oblivion by those in the know?  It made no sense to keep shorting the miners, now it does.  I'd say this gold take down has been well known by the well connected for three or four years.

Mon, 12/02/2013 - 21:07 | Link to Comment magnetic_silver...
magnetic_silver_ideas's picture

You're a conspiracy theorist nutcase...  It made total sense to keep shorting the miners. Now it doesn't.

GISM is on it.

Mon, 12/02/2013 - 21:11 | Link to Comment greatbeard
greatbeard's picture

>> You're a conspiracy theorist nutcase.

Thank you....thank you very much.

Mon, 12/02/2013 - 23:14 | Link to Comment OneTinSoldier66
OneTinSoldier66's picture

"Clearly this take down has been in the works for years."

 

Can you say... 1913? One-hundred works too. :-)

Mon, 12/02/2013 - 21:06 | Link to Comment Son of Captain Nemo
Son of Captain Nemo's picture

"Of course, should the central banks of the world succeed in driving the price of gold to or below its costs of production (repressing yet another asset class into stocks) then we fear the repercussions will backfire"...

And oh "yes".  How it certainly will!

Mon, 12/02/2013 - 21:06 | Link to Comment dracos_ghost
dracos_ghost's picture

Christine Lagarde needed new shoes:

http://www.imf.org/external/np/exr/facts/gold.htm

This is the end game for the new IMF SDR -- just a matter of time before they announce it. $1162 was the "fair market pricing" back in late 2008 for the BRICS if I remember correctly.

Fan meet shit.

Shit let me introduce you to fan.

Mon, 12/02/2013 - 21:08 | Link to Comment Teddy Tenpole
Teddy Tenpole's picture

 

Look at natural gas you doomer douche bags -- it's been trading below industry profitibility for years!

hey, I got sucked in on gold too -- bought NEM a few weeks ago.  prolly just sell it tomorrow.

 

wake me up at $1,000

Mon, 12/02/2013 - 22:46 | Link to Comment Rock On Roger
Rock On Roger's picture

My company produces gas at half of today's nymex spot price.

Who is the douche?

Sell your gold, speculate and buy bitcoin.

 

Stack On

Mon, 12/02/2013 - 23:58 | Link to Comment BringOnTheAsteroid
BringOnTheAsteroid's picture

What do you mean sucked in. You mean you puchased gold in order to trade it back for nominally more fiat. Man we are so infused, infected, indocrinated by paper money we just can't imagine owning something that doesn't attach a dollar value.

If you bought gold for the purpose of traduing for fiat, more fool you.

Mon, 12/02/2013 - 21:14 | Link to Comment walküre
walküre's picture

Who has unlimited printing power and is accumulating the metal currently more than anybody else? If I was the single largest buyer of gold, I'd have a vested interest to drive the paper price down with all that funny money I'm flushing into the system. Is it the Fed? Don't believe they are buying. The Chinese are pumping currencies and other debt paper from unquantified origin into the system which allows them to produce below cost. They can also short paper gold up the ying yang and never get caught short handed. Long live Mao. The experiment is working!

Mon, 12/02/2013 - 21:27 | Link to Comment new game
new game's picture

best theory imo. paper dumps -phyz delivery at lower and lower prices. wonder what their average domestic cost is? win/win/win(eventually).

Mon, 12/02/2013 - 21:16 | Link to Comment delivered
delivered's picture

Investing in PMs really only comes down to one simple question and what you believe. That is, if you believe that the world has fixed its problems (both monetary and fiscal policy), the foundation of economic growth is squarely intact, the current economic model will begin to redistribute wealth and elevate people out of poverty, etc., etc., etc., then it is without question time to sell your investments in PM and move forward.

On the other hand, if you believe the root problems are still present and are only getting worse, the current economic global model is broken, fiscal and monetary policies are flawed, etc., etc., etc., then investing in PMs represents a prudent decision. 

Remember that I said "invest" and not trade, speculate, or gamble (as I can't speak to these strategies). So take a deep breath and answer the question honestly and you will have your decision.

Mon, 12/02/2013 - 22:00 | Link to Comment RaceToTheBottom
RaceToTheBottom's picture

There has to be a better reason than faith based investing....

Mon, 12/02/2013 - 21:19 | Link to Comment new game
new game's picture

one big head fuck.

life used to be simple.

play with fire, fun - oh yea, but ...

now i don't know what to think.

well i do, but the fire isn't burning anymore, well

i do as you know that fire WILL burn ya.

fuck em all...

cash for now

 

Mon, 12/02/2013 - 21:20 | Link to Comment papaswamp
papaswamp's picture

not low enough yet...not many mines on the market yet... another $20 drop and we will be there

Mon, 12/02/2013 - 21:28 | Link to Comment billsbest
billsbest's picture

Why wouldn't this be a sensible move by the banksters to scoop up all the mines themselves, never mind waiting for production - buy/steal the resources themselves, no?

Mon, 12/02/2013 - 21:29 | Link to Comment new game
new game's picture

well 1181.xx will be complete retrace. below, will be brief encounter of buying when everyone scared shitless...

Mon, 12/02/2013 - 21:39 | Link to Comment Pancho Villa
Pancho Villa's picture

When gold is high, miners tend to process lower ore grades in order to make money from them while they can. And when gold drops, many will be able to switch back to higher grades with lower processing costs. There were a bunch of miners making money, even when gold was a few hundred dollars/oz not so long ago. I can't believe that processing costs have risen so much in such a short time.

Each miner probably does have a minimum cost at which it can profitably produce gold. But I'm skeptical of articles claiming to know what that cost is. An extended gold bear market will probably shake out some high cost miners, particularly new ones. But I think that even if gold were to drop a lot more there would still be some miners that would be profitable.

I think we just need to be patient and wait for the gold dust to settle. Eventually gold and gold miners will become bargains again. Actually, I'm kind of hoping that stocks and Bitcoin will soar to the moon. Gold was a real bargain during the dotcom bubble when everyone's attention was focused on internet stocks.

Mon, 12/02/2013 - 22:01 | Link to Comment dark pools of soros
dark pools of soros's picture

so they only living hand to mouth?   Shouldn't they have enough operating cap to withstand some dry spells?  Why would a miner even sell at low prices?  Wouldn't they do better to hoard unless they were some debt driven company forced to pay massive debts..  isn't that against what someone holding gold would practice? 

 

So no faith that gold will ever go up if one stops mining now right?

 

Mon, 12/02/2013 - 22:48 | Link to Comment Pancho Villa
Pancho Villa's picture

So no faith that gold will ever go up if one stops mining now right?

Well, I don't believe that gold mining is going to stop. The miners that are able to switch back to higher grades will do so. And the others will shut down. It makes no sense to mine gold when production costs are higher than spot. Why would anyone spend $1500/oz to mine gold if it can be bought for $1300/oz?

But even if all the mines did close, it might not make so much difference in the short term. The amount of gold which is above ground is large compared to the amount that is mined each year. Gold is not really consumed like wheat or oil. A lot of it is made into jewelry or coins which can last for thousands of years. And even the gold which is used for things like electronics can often be recycled. I can easily buy a gold coin from 1923. But how much wheat or gasoline from 1923 is still around?

So the above ground gold acts as a buffer. If mining drops, the difference can partly me made up by buying gold from speculators looking to cash out and invest in stocks or real estate or whatever else is that year's hot investment.

Of course, if production drops it will eventually cause the price to rise. But it might take a few years.

As I said. Just be patient. Gold will rise again.

Mon, 12/02/2013 - 22:09 | Link to Comment FieldingMellish
FieldingMellish's picture

" There were a bunch of miners making money, even when gold was a few hundred dollars/oz not so long ago. I can't believe that processing costs have risen so much in such a short time."

 

That was when oil was $10 a barrel and average grades were much higher. Peak gold...

Tue, 12/03/2013 - 00:23 | Link to Comment RumCurrency
RumCurrency's picture

I have actually read a study that gold miners tend to reach their peak well after the peak in PM prices.  Obviously that thesis seems far-fetched at this point, but it will be interesting to see how miners act in this environment.  I am invested pretty heavily in the sector already.  This doesn't feel like the time to add to or reduce my positions, but I'm fairly sure that from a multi-year perspective they are a good buy at these levels.

Tue, 12/03/2013 - 15:00 | Link to Comment Amagnonx
Amagnonx's picture

All you are doing chasing the highest grades is working inefficiently - if gold rises later you will need to go and rework old sections which could have been done cheaper in the first place.

Sometimes you can just separate the ore and process the high grade and dump the lower grades for later processing, but its not really much of a saving - most of the costs are getting it out of the ground in the first place.  Some places just don't have the grades you need either, so chasing high grade is possible only if you have high grade seams.  A lot of open cuts just don't have much variation in grade.

Mon, 12/02/2013 - 21:39 | Link to Comment Kina
Kina's picture

The forces behind the manipulation of Gold are the nastiest most evil group of the lot, these are the people that propegate wars and death for personal power and profit, that would slit their grandmother's throat just for fun. Trading in deceit and bodies is nothing to them.

Smoking these vermin out from beneath their rocks will take a global catastrophe...and even then you will have only a few seconds to stomp on them as they run to another rock.

 

These are the kissenger like scum.

Mon, 12/02/2013 - 23:25 | Link to Comment OneTinSoldier66
OneTinSoldier66's picture

Hoover? He was a body remover!

 

So he got a Dam named after him for his services.

Tue, 12/03/2013 - 00:52 | Link to Comment TheHound73
TheHound73's picture

Those who own the most gold are not your friends.

Tue, 12/03/2013 - 02:03 | Link to Comment IridiumRebel
IridiumRebel's picture

You could say th same thing about stawks.

Tue, 12/03/2013 - 03:02 | Link to Comment Mrs. Haggy
Mrs. Haggy's picture

What's stopping the manipulators from keeping the miners afloat with the public's money?  Either through taxes or simply printing money, the people's money could be used to keep the price of gold low.  It would be the perfect screw-over from both directions.  Not that I want to give them any ideas...

Mon, 12/02/2013 - 21:42 | Link to Comment RaceToTheBottom
RaceToTheBottom's picture

What is physical gold?. 

I thought the only thing that mattered was ETF Gold or some entity called GLD

Mon, 12/02/2013 - 21:57 | Link to Comment dark pools of soros
dark pools of soros's picture

stackers run out of money??  all dry powder used up? 

Mon, 12/02/2013 - 22:41 | Link to Comment Keyser
Keyser's picture

Would you put all of your eggs in one basket? 

 

Mon, 12/02/2013 - 23:43 | Link to Comment sixbilliondollarman
sixbilliondollarman's picture

YES! ,,,now unsecured debt will carry the rest of the way.

 

https://www.youtube.com/watch?v=kkZdGCMiR_4

Mon, 12/02/2013 - 21:58 | Link to Comment alfbell
alfbell's picture

 

 

I believe many will be screwed on gold. It's been decoupled from inflation. It is now a commodity that you might be able to make money on trading in and out of at the appropriate times. It will never be money and it will never back money again. Governments won't allow it. It won't be a store of value if you can't transact with it. We're going electronic... it's the only way governments will be able to track and tax every transaction and get the revenue they will desperately be needing as things continue to implode (pensions, deficits, unemployment, etc.). Government doesn't want you to have gold and they will capital gain tax the heck out of it. (Selling gold in Calif right now with Fed and State taxes = 40% tax!) They won't need to confiscate it or make it illegal. They'll raise the cap gain tax to 80% and take all of your profits whenever you try to sell. Gold is not THE solution. It is one tool in your diversification tool box. The ultimate wealth is pure clean water, food and shelter. I'm building my portfolio around that. Goldbugs can junk me all they want but that won't change reality.  

Mon, 12/02/2013 - 22:09 | Link to Comment taraxias
taraxias's picture

Reality is you still believe this shihouse won't collapse.

And if it does, you'll have nothing.

Goldbugs, as you call them, already bought their insurance.......for those who haven't lost it in a boating accident that is. 

Mon, 12/02/2013 - 22:25 | Link to Comment dark pools of soros
dark pools of soros's picture

Do you want to outline how this collapse unfolds?   Been watching every episode of Walking Dead and never once anyone gave a shit about someone with gold....

 

So how does your collapse play out that a pile of gold makes you king of the new era?

 

Here's a secret..  Gold is used by kings; it doesn't make kings.  If you aren't a king, your gold isn't going to do anything but attract people looking to take your gold and give it to the king to appease the king

So you best already be a king in your parts of the woods

 

Mon, 12/02/2013 - 22:46 | Link to Comment Keyser
Keyser's picture

There is physical proof that gold has been money for thousands of years. There is also proof that every fiat currency ever created has failed. Electronic is fine as a trading medium, but not as a store of wealth. Besides, what happens when the grid goes offline? Electronic currency won't be of much good then either. You've seen the Walking Dead, right?

 

Tue, 12/03/2013 - 00:06 | Link to Comment OneTinSoldier66
OneTinSoldier66's picture

"Electronic is fine as a trading medium, but not as a store of wealth. Besides, what happens when the grid goes offline?"

 

You just brought up a question in my mind.

 

I wonder, at least a little bit, how are Bitcoiners in Venezuela doing right now while the electricity is failing?

Tue, 12/03/2013 - 09:02 | Link to Comment Keyser
Keyser's picture

Bitcoin is for the melinials that believe everything around them is a given. Infratructure, electricity, clean water, etc... All I know, is that if I'm stuck on an island in SE Asia, Bitcoin will be worthless to me while gold / silver will always have an intrinsic value. 

Tue, 12/03/2013 - 00:58 | Link to Comment TheHound73
TheHound73's picture

When the power goes out, there goes industrial demand for gold.  I guess there's always intrinsic bling demand, dazzles zombies long enough to make your escape.

Tue, 12/03/2013 - 02:05 | Link to Comment IridiumRebel
IridiumRebel's picture

If you saw what I saw during Sandy, you would retract that statement.

Tue, 12/03/2013 - 08:59 | Link to Comment Keyser
Keyser's picture

All semblance of civility goes right out the window when calamity is at hand. Desperate people will resort to desperate measures very quickly when their bubble is punctured. 

Mon, 12/02/2013 - 22:58 | Link to Comment Rock On Roger
Rock On Roger's picture

Sounds like you've really gained some wisdom from those episodes you're watching.

Better get another teevee so you can be twice as wise.

 

Stack On

Mon, 12/02/2013 - 23:06 | Link to Comment akak
akak's picture

Dark Pools, I admire your skill in stringing together such a lengthy concatenation of strawmen, red herrings and non sequiturds.

Tue, 12/03/2013 - 03:48 | Link to Comment Bay of Pigs
Bay of Pigs's picture

You know pal, I've about had it around here anymore. This place fucking sucks when it comes to intelligent postings on gold and silver.

Might be time to ride off this board soon....I'm sick of the useless assholes, idiots and fucktards.

Mon, 12/02/2013 - 23:07 | Link to Comment Vooter
Vooter's picture

"Been watching every episode of Walking Dead and never once anyone gave a shit about someone with gold...."

LOLOLOLOLOL...what else has your TV taught you lately? Pretty embarrassing, pal...

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