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Gold Drops Below Cash Cost, Approaches Marginal Production Costs
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.
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At least you know that when the zombie apocalypse occurs you can only kill them with a head shot. I guess your first move since taking your life lessons from Dead Man Walking is to go to prison for safety. Good luck sir.
Gold was never a good inflation hedge. T-Bills have always outperformed gold in that department. Gold is about monetary and financial collapse. That is not something that most people believe will happen in the near or even distant future.
That's not what your average Indian would tell you.
In India, owning Gold isn't about protecting from currency collapse, it's about having a store of savings for a rainy day and protect them from inflation and the taxman.
In the West people might have forgotten the good old days of 20% or more inflation and no social security safety nets, but they're quickly being reminded of that.
Ever heard of the EPA? While I agree 100% with your post; the fact is that beautiful, clean water, is the easiest thing to take from you. Short of an alien invasion, there is only one solution to this little problem we're having.. just ask Bo
Very true but it is also true that gold as a store of value and jewelry in Asia will remain popular.....the movement of gold price setting to Shanghai will continue and it will not matter what goes on in NA after that........
Perhaps your right but you thesis can be taken as a point as to why gold would survive. "We're going electronic...it's th only way governments will be able to track and tax every transaction..." Sort of makes the case for gold if peering through a different lens. Government doesn't want you to have a lot of things, like illegal drugs yet they are worth money.
Pure clean water, food and shelter... dude you can bet the government will take that a way from you through eminent domain at the hour of their choosing. Good luck.
You're clueless.
Water, food and shelter are (in most places) already taxed so even if you don't sell them you bleed cash to retain them in you possession.
And like the other comment said these are first and most obvious targets for theft by the government.
Only if you leave yourself in the path of the US gubbamint. Staying in the US is your decision.
I'm happy it's down and hope it keeps going down. I'll just keep buying all the way to the bottom. What else is there to park money in that's such a great deal?
It was a deal at $1,900, right? And not even reaching the all time high adjusted for nflation. I'm waiting for a better deal.
Bitcoin right? Gonna keep going up just like when gold was at $1900. Already got my better deal at $300 back in 2000.
To achieve what it did in 1980 adjusted for inflation of the money supply, it would have been over 10k. It was 130% of M1 in 1980. Right now it is about 9% The bankers are losing gold because they started this intervention too low. Even I would have sold some at 10k. It is actually the cheapest vs the money supply that it has ever been.
Psst! I heard that "Quark" was going to be BTC's #2...just sayin'
Gold extraction costs having little to do with the price of gold. The price is purely set by speculative interest or fear of collapse...hmmm...errr...about that Price Fixing scandal...errr...Free Market!....uhhh...
Buy Gold!
Gold still in corrective move down.
http://bullandbearmash.com/chart/spot-gold-daily-unexpectedly-tanks-corr...
1175 is a key support area.
If demand is high and production low, physical markets (coin shops, ebay, etc) would all be skyrocketing, but they're trading right at normal premiums to spot.
What gives?
Is this demand just China CB and not retail investors?
Exactly. How long does the price need to be artificially suppressed before real cracks appear in supply? +10 years + China/Russia/India not enough? We were so close! Gold needs to step up it's PR game.
I have a feeling that the end is closer than any of us imagined.
Maybe the end game here is to force majority of gold miners into bankrupcy and repossess their mines by the banking oligarchs?
... and get rich mining $0/oz priced gold!
If gold is nothing why did they want kissenger to trash it...and why have tptb bothered to trash it down from 1900 and why did they recently dump 400 tins of paper gold into the market in one hit recently. ...
I think to tptb gold is freaking everything and dangerous to them. .
Fundamentals don't apply yo gold. ...only the intention and ability of tptb to control it the way they want. ...all analysis is thus nonsense. ..unless you are wanting to determine the bounce bsck once manipulation ends...
Martin Armstrong says that the goldbugs are very wrong in the idea that gold is and can be strongly manipulated by some elite group or whatever. There is no historical proof of this. Minimally influence it, maybe... control it, no way. No one can control a trend or nature. An asset class is too complicated, and too big and it is influenced by many domestic and global factors for someone to be able to manipulate it. Gold is going down because people are liquidating to handle margin calls or getting out of a dwindling asset to go into stocks or something else. Gold has been on a 13 year bull market. Even though it has dropped from 1900, it can still be considered in a bull market. But all bull markets end and 13 years is a pretty good run. There is no conspiracy. If anyone has actual facts and proof historically of some group successfully manipulating and controlling gold I'd like you to cite it. I also don't agree with the Armageddites talking about the grid going down and there being no electricity = no electronic money, etc. The whole Mad Max scenario is so improbable... and even if it happened it would be decades from present time. The Survivalist-Mad Max-Armageddon mind set has been around for so long. It is so hackneyed and unrealistic. We've got too much technology, intelligence, man power and resources for there to be a collapse back into the stone age. Get real.
Martin Armstrong is a pathetic broken man and an outright liar, who clearly sold his soul to the Establishment Devil and agreed to shill for them in return for being released from prison. It's hard not to notice what a different (Nadleresque, anti-gold) tune he sings nowadays vs. the steadfast anti-Establishment, pro-monetary freedom message he used to propagate before and during his imprisonment. Just coincidence? I think not.
Aside from that, he is full of shit and flat-out wrong, as the US government, in collusion with its European allies, manifestly suppressed the price of gold for at least a decade or two prior to Nixon's floating of the US dollar, and severing of the link between gold and the dollar, in 1971. That is why gold proceeded to rapidly rise in price immediately thereafter, and in the years following NEVER fell back to even triple its pre-1971, artificially suppressed price of $35/oz.
Martin Armstrong, kiss my ass.
akak:
Per my regular reading of Armstrong's blogs, he still seems to be full of fire and brimstone against the establishment to me. He doesn't hold his tongue. Pathetic broken old man? How so? Who's predictions/projections have been more correct than his? He has very good source lines into governments, and great international connections. He has a great knowledge of financial and monetary history. He's out of the U.S. and operating in Switzerland now. He's railing against what governments and central banks are doing and trying to do something about it. He isn't operating off of opinion, he utilizes his computer model which is programmed with historical data and facts. He makes a lot more sense to me than any other finance experts. Jim Puplava is also a good source.
Alf: AKAK has been around a long time. Long before ZH. He get's it. AKAK could probably write his own PM newsletter by now.
Armstrong sold out. His railing on gold is laughable and pitiful. You should be ashamed posting his dogshit here.
Armstrong got the bat snot kicked out of him in prison.....almost died....and has never really been the same since.
But.....he did get away with the gold. Kudos.
Seriously? Controlling the markets doesn't mean using your own capital to do it but to interfere at key points to establish a trend. Then, some maintenance and a bit more intervention to push through supports. The trend is your friend, especially one that you worked hard to create.
HERP DERP
http://www.bloomberg.com/news/2013-11-26/gold-fix-drawing-scrutiny-amid-knowledge-tied-to-eruption.html
Am not a doomer but i will put it for you this way. Electricity going off aside, assume you are in a community of 10 people and you are the owner of bakery, you know that each one of those individuals makes about $100 a month, so you sell a loaf of bread for $1.
NOW! What happens if you get to know that some of them is now making $85billion a month, and then you get to know that now they are making $300billion a month how much would you sell the bread for?! Also assume there are 3 people in the room who are still making $100 month still?!! How much would you sell it for before they get mad and kill you at the end.
gold measures fraud, its that simple dimwit
I think that people underestimate the amount of gold produced by panners, freelancers, illegal operations, and family operations. I heard it said that there are a million little gold mining operations in Africa, South America, and Asia. These are worked by upwards of 30,000,000 workers. All told, that could add up to another 1000 tones of supply each year.
www.wikileaks.org/gifiles/attach/61/61109_Cartels%20and%20Mining.doc
Thought you could like... mine gold with your computer n stuff for free in my mom's basement.
This just popped up in my Inbox:
http://www.mauldineconomics.com/ttmygh/pdf/twisted-by-the-pool
Verr-r-r-ry interestink...
..."Gold Drops Below Cash Cost, Approaches Marginal Production Costs"
Given the crime spree known as the US Government, it would be very diffucult for me to see this state of affairs as by happenstance.
In other words, this is as accidental or random as the last domestic lead smelter being run out of business by the EPA.
Same reason they threaten reverse interest on bank deposits. They want to scare every possible buck into the market they can.........and then pull the plug.
Sum Dum Guy mentioned buying some MOAR (SILVER) rounds, NO?
Tuesday is usually a good day to buy silver.
Some nice shiny silver rounds.
Since they are very cheap I'll likely pick up 3.1 kg of soon to be extinct silver.
Someday I may trade some of those shiny rounds for beer and weed.
Real Value.
Stack On
You could just grow it and brew right now!
... followed by a second, even greater deflation, ending with hyperinflation...
Bit Coin is going to be more tangible than gold, oh for joy!
Bernanke should tell India of his plans to taper to maintain any fedibility that the EM will NOT BLOW UP! The 'manipulators' working their magic in Japan and India tonight!.....again!
Miners start to go bust. Private equity firms backed by billionaires buy up mines and claims for pennies on the dollar (junior gold claims are already selling for $10/oz or less with 2 or more million mineable ounces). Gold all of a sudden starts rising again. Is that the plan?
Maybe the plan is to bankrupt many of the mines, and then buy them for pennies on the dollar.
Been listening and reading about the gold/silver issues for several years. The thing is, things don't always end up the way logic demands when it comes to issues of metals (or finance for that matter). Mostly because we have a powerful group of people who are running the entire world, and nobody but an inner circle knows what kind of tricks they have in their bags. By all accounts Gold should be at least $5000 and silver at least $250.....But they defy logic by their manipulations and therefore it is not rational to keep believing the metals will get their fair shake.
It looks like they are going to bring in an online currency...start of a cashless society? It looks like we may all have been had. The same families look to be in power the next few hundred years.
You need to wake up and realize that you ARE in hell. We just keep coming back to the same shit every lifetime....over and over and over again...
There's no way out. Welcome to hell, where there is gnashing of teeth for eternity.
akak:
Per my regular reading of Armstrong's blogs, he still seems to be full of fire and brimstone against the establishment to me. He doesn't hold his tongue. Pathetic broken old man? How so? Who's predictions/projections have been more correct than his? He has very good source lines into governments, and great international connections. He has a great knowledge of financial and monetary history. He's out of the U.S. and operating in Switzerland now. He's railing against what governments and central banks are doing and trying to do something about it. He isn't operating off of opinion, he utilizes his computer model which is programmed with historical data and facts. He makes a lot more sense to me than any other finance experts. Jim Puplava is also a good source.
Catepillar in trouble strikes me as good news for the miners not bad. No gold in Syria...another plus for gold production. Gold in North East Asia? Is it sunny in Florida? All eyes on the Sino/Japanese staredown. This ones for the gold and "cracking the oyster" through to Mongolia.
The Rothchilds (David is the head now) have estimated 500 trillion (yes trillion) in assets. They controll much of the gold trade.
https://www.youtube.com/watch?v=VxmJUBDgpyQ
and the Rothchilds are not listed in the top 100 of the worlds richest.
Off topic, but I bought some crypto-currency today.
It really is useless--can't spend it anywhere good. The transaction took a long time to show up in my wallet...had all kinds of syncing issues. Then there are warnings that malware can wipe out the wallet at any time, etc. Just due to all the technical things that could go wrong, I'm terrified to own these things, and already searching for the greater fool. I was also curious how my psychology would change. Sure enough, I feel more compelled to say crypto currencies are good (though I am overriding that right now, obviously). If I had more money invested in them I'd be talking them up but doubt I'd sleep at night.
Just issue a format c: /q at the command line before you shutdown. You'll sleep better at night.
We are seeing maximum negative commentary on gold from all sources....very bullish. Gold is still in a range and I doubt it will go below $1150 given the strong support from Asia. My guess is that it could trade sideways for a little longer but will go up again dramatically once it becomes clear that the cupboards are bare in the west and that the price setting dynamic has moved East...all the paper ETF's are losing influence and the nonsense about "to QE or not to QE" is not the question for non NA buyers. (I guess they read more Confucius than Shakespeare?)........those who hang in there and step around the pools of blood on the street could be rewarded....although I guess such traditional and logical analysis is anachronistic, n'est-ce pas?
Gotta shake out the remaining weak hands.
The fuckhead overstearded rhe car. Alidf sideways pole side. Road sine 15 MPH= 45mph
Deflation. The more they print the more the dollar gains against gold.
Central bankers have taken over reality and have now made themselves equal to God.
Golden Calf lesson time right around the corner.
Youre an Idiot! I was trying to be sublime, (show some humanity)
This is dated a bit but still from 2013.
http://www.veteranstoday.com/2013/07/14/whatabout7/
Grant Williams weighs in on gold - must read:
http://www.mauldineconomics.com/ttmygh/twisted-by-the-pool
Major stories that few people are aware of:
China will stop buying US Debt http://www.bloomberg.com/news/2013-11-20/pboc-says-no-longer-in-china-s-favor-to-boost-record-reserves.html
China’s gold purchases are off the charts http://dollarcollapse.com/wp-content/uploads/2013/11/China-gold-imports-Oct-2013-final-version.jpg (this does not include domestic production or unofficial imports)
Gold price manipulation http://www.mauldineconomics.com/ttmygh/twisted-by-the-pool
So it would appear China is writing off their USD holdings --- and they have made their bets… that the US is done as the world power --- and that gold will again be the basis of our financial system.
The big questions are – if China is out of US debt, others are surely seeing that – so who will buy US debt – does the Fed increase QE?
Does this result in the Fed losing control of the bond market?
Do you follow the Chinese into gold?
My money is on China being right (but of course when the US collapses so too will China - but China will be holding all the gold....)
The silence of the blockheads -- maybe soon to be dead silence
Noting that the price of gold is starting to fall below the cost of production, Zero Hedge observes tonight: "Not even Bernanke, Yellen, or all the paper gold exchange-traded funds 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 demand, especially by China, is still in the hundreds of tons each year."
The Zero Hedge commentary speculates about the gradual shutdown, company by company, of the gold mining industry as production costs cannot be recovered. It's headlined "Gold Drops Below Cash Cost, Approaches Marginal Production Costs" and it's posted here:
http://www.zerohedge.com/news/2013-12-02/gold-tumbles-towards-marginal-p...
Of course there's no telling when enough of the world outside of a few central banks will wise up to paper gold and when the central banks that have been leasing and swapping their metal surreptitiously for price suppression will run out of metal they're prepared to lose, just as the central banks operating the London Gold Pool reached that threshold in March 1968. The next moment of transition might be many years away, or it could come tomorrow. (Most likely it will be a Sunday night U.S. Eastern time, which is when such things are usually sprung on the world by its unelected rulers.)
What may be most remarkable about the present is the silence of the gold mining industry and its supposed representative, the World Gold Council -- silence that, as the Zero Hedge commentary suggests, soon may be dead silence.
The proof of surreptitious intervention against gold by central banks has reached towering proportions --
http://www.gata.org/taxonomy/term/21
-- and the destruction of the gold mining industry's capital has become catastrophic:
http://tinyurl.com/q2dwryf
But on the whole the industry is dumber than the rocks it mines, just as the entire gold sector -- including mining company investors and adherents of free and transparent markets in the monetary metals -- has been demoralized into silence as well.
Financially pressed is one thing; demoralized is something else. GATA is financially pressed too; it runs on donations that have shrunk to almost nothing with the gold sector's decline, and so GATA's operations likely will be sharply curtailed in the new year. But GATA will keep the flag flying as long as the electric and Internet service bills can be paid out of the pockets of its officers. If you're still invested in mining companies and have not contacted them about GATA's work, what's your excuse? Is the end of the gold mining industry really a prerequisite for the liberation of the price of its product?
CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.
If the supply was to dry up or slow down to a crawl then that would be game changer.
They are playing a dangerous game by taking the price down further.
The fools of the world are selling their gold to BUY BTC's, which makes gold cheaper for us to buy more on the dip,
This my friends is how the rich get richer.
The latest CoT shows producers are long 5,960 contracts (596,000 oz). That is unprecendented. Nobody is more likely to bring in the trucks and clean out what little registered gold remains in the Comex than a player in an industry that is being completely abused by these paper attacks. Incidentally they are 590,800 ounces of registered gold left at the Comex.
Many miners around today were mining when gold was $800. I was listening to an earning call the other day and -somehow- the company had managed to go from $1300 all in cost to $1000 all in cost in only one quarter. The reality is the board of executives for a lot of these mining companies are no more moral than those of the banks, if spot is $1500 they'll be producing for $1400, and if its $1200 they'll be produing at $1100. Obv the ones who got all levered up or who drained all their cash during the boom are likely to go under but I think we still got room before the not-so-dumb miners would even think about shuttering their doors for higher prices.
You know, China makes stuff. The air quality there looks like the descriptions of London in the industrial beginning. If they made a threat to dump USDs, it would hurt, but they could still make stuff. The US cannot.
So maybe they are pressuring the west to suppress Au: it holds up the fiat value and allows PRC to gain moar Au. Temporary win-win. The banksters care not about US/UK, they will do as their nature requires, namely follow the Au. When western fiat crashes and the Yuan rises, the banksters will be there ready to "handle" PRC financial transactions.
As evidence, I see a growing number of Yuan swap deals in a growing number of countries.
Gold, Bitcoin, magik beans
it's all good
Three factors dont make sense: A) the entire production of gold YoY is going to China and India. B) the the cost to produce the gold is going up. (C) Yet the price of gold goes down.
Quite frankly, the markets are broken if the price of gold is going down. The "actual" gold market is going to decouple from the ETF market if they keep doing this.
I guess "they" are also betting that institutions will sell their ETF contracts on stop/loss rather than try to collect their gold. If, however, large holders decide to call their bluff and collect... then the ETF markets are truly fucked; on an Epic scale.
That said, I've been cashed out for a month now, and I'm looking forward to the "OH MY GOWD" when gold drops through 1200 (and commodities drop in general). Bit of a blood bath in the FTSE. I wonder if the main event is starting up.
Where are they going to get gold for under $1200
Who in their right mind would hand over their physical gold holdings at $1200 or less?
Are wholesalers going to get actual gold at these prices to on sell?
All very well for the Comex to have Gold at 1,200 ..... the lower they drop the price the more the market dries up...and I expect the market for physical gold will disappear altogether....except for random individuals selling their coins.
Indeed at 1200 and below there will be attempt to load up on physical in bulk...if it can be found.
In fact they risk a major buy up....
If I had gold and silver now, I would be selling the gold, because silver has the better upside, and also because I don't have another asset to sell to pay the rent. Sometimes you have to sell.
The bottom won't be far from 1000. Maybe a push through to bankrupt some miners and get the goldbugs bearish.
THE disconnect, coming into plain sight for everybody to see (read: headline in your local newspaper) very soon. Got phyzz ?
http://www.dailymail.co.uk/news/article-2517106/NatWest-RBS-Cyber-Monday-meltdown-EMPTIES-customers-bank-accounts.html#addComment
And they ask us whey we invest in Bitcoins and precious metals....
Complete and total anarchy is but the flick of a switch away.
The lower it goes now the Less likely anybody will sell... under 1000 nobody will sell......espcially when production cost is over 1000
In fact all they will do is stimulate more buying...especially out of Asia.
The only way to free up gold and silver...is to actually increase the price. Gold and silver would have been freely available around 1900 and 49
UBS: "We cut our gold forecast in 2014 by -9% and silver -18%/ -13% in 2014/15, expecting prices to remain subdued for 4+yrs. "
China is absolutely delighted at the sheer stupidity of the central bwanksters. China will have a currency that is fully backed by gold instead of the useless toilet rolls that the Fed produces
When your enemy is weaving his own noose, stand back, he will likely put it to good use of his own volition.
China gets to trade in their worthless U.S. bond holdings for an asset that cannot be monetized. What better time to do so then when said assets price is being manipulated downward by the very people you wish to surplant.
The official war on gold is no different than the war on physical dollars. Hey buddy, got change for a 50k treasury or hey buddy, got change for 100 shares of IBM? Physical cash is for the people, electronic digits arre for the masters.
We live in a world of shadows controlling the physical.
The grand plan:
C/B's sell their peoples gold to India, middle east and China thus extracting wealth to keep the people in those countries in poverty. When all physical is sold create paper gold thus driving the official price of paper gold down to $100. Offer to buy it back at the low price using electronic money which has no cost thus stealing the wealth for the other countries and keeping them in poverty. Talk up gold to higher prices and rinse repeat.
C/B's have NO physical gold and that FACT must be kept at ALL cost.
IMO, the analysis used to calculate the marginal cost is total Bullshit.
Just to make a point: Look at the inflation rate of the marginal cost. The COST HAS MORE THAN DOUBLED in 6 years. My experience with the metal industry is that this typical "goalseek" type analysis reeks ... and that is because it is BULLSHIT. The metal industry famous for inflating its marginal costs hugely to try to gouge more money out of stupid people ... and that is because the metals industry and metals prices are completely controlled by banks who know nothing about productive work, but can control price.
Mine supply is half the entire supply of gold (mine supply + recycling + ETF outflows). If mine supply goes down, prices should go up. The thing is, mine supply is increasing now because they are targetting higher grades.