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Russia On Way To Becoming World No 2 Gold Producer As Peak Gold Hits West
The Russian central bank acquired another 300,000 ounces worth $390 million in July. Russia's gold reserves rose to 35.5 million troy ounces in July from 35.2 million troy ounces in June, the central bank said on its website on today. The value of Russia’s holdings declined marginally to $46.11 billion as of August 1 from $46.29 billion a month ago due to gold’s recent small price fall.
Russia continues to accumulate gold in an effort to bolster the ruble and be prepared for a deepening of currency wars.
Russian central bank acquired another 300,000 ounces worth $390 million in July
Yesterday, we reported on China’s intent to become a global gold hub and key player in gold price discovery. Another important player in the gold market at the moment is Russia. Their intentions are not as ambitious of those of China. However, Russia sees gold as a valuable monetary asset that will protect the ruble in the continuing currency wars.
This is why, Russia has been one of the largest buyers of gold in recent months (see chart) - largest sovereign buyer and one of the largest buyers in general. Although we do not know how much gold the People’s Bank of China is quietly accumulating.
Russia now looks set to become the world’s second largest producer of gold, after China and surpassing current world number two gold producer Australia.
Mining Weekly reports that
“The Gold Royalty Response Group (GRRG) has warned that Russia could replace Australia as the world’s second-largest gold producer if it met production forecasts by the Gold Industrialists’ Union.
The Russian lobby group estimates that the country could increase its output to some 275 t during 2014, as the industry boosted production by 26.6% during the first half of the year.
GRRG spokesperson and MD of gold miner Silver Lake Resources Les Davis pointed out that gold exploration in Western Australia had dropped by some 50%, as profit margins in the sector continued to narrow.
“The big increase in Russian gold production comes at the same time as gold producers in Western Australia are putting exploration on hold,” Davis said.
“Almost two-and-a-half years ago the Western Australian government launched a review of the royalties paid for mineral commodities, including gold. High operating costs in Western Australia and low gold prices have made the sector increasingly marginal so most gold producers have put exploration on hold as they wait for the outcome of the review.”
Davis said the state’s gold miners were confronting an increasingly competitive global market and could not sustain any further cost increases.
“Our industry has been a mainstay of the Western Australian economy for more than a century, but we can’t compete if we continue to face increased cost burdens. We pay our fair share of taxes and royalties and we are competing in a very tough global market.”
The GRRG recently launched a social campaign to highlight the vital contribution made by the gold industry in an effort to sway public opinion on an increase in gold royalties.
The state government was currently undertaking a royalty review, which was expected to be completed by the end of 2014.”
Russia values its gold and this is one of the reasons that it bans gold exports and all gold production in Russia is bought and used in Russia itself - including by the Russian central bank.
The decline in gold production in Australia has been blamed on royalties and gold’s falling price in recent years. Yet, there is a real possibility that Australia, like many other gold producing countries, may have reached “peak gold.”
Geological constraints and the inability to find new sizeable gold ore deposits and the exhaustion of existing ore deposits had led to falling production in other large gold producing nations. Indeed some such as South Africa have seen sharp declines (see chart).
Recently, the decline in South African gold production was attributed to national electrical issues, power outages and industrial unrest. However, the scale of the decline at a time when gold prices has risen since 2001 and there has not been a corresponding decline in base metals mined in South Africa suggests that geological constraints may be leading to lower gold production.
Peak oil is a phenomenon familiar in the popular consciousness – peak gold is a phenomenon yet to be understood.
Peak gold is the date at which the maximum rate of global gold extraction is reached, after which the rate of production enters terminal decline. The term derives from the Hubbert peak of a resource.
South African Gold Production Continues To Plummet
Unlike oil and silver, which is destroyed in use, gold can be reused and recycled. However, unlike oil, gold is money, a store of value and a foreign exchange reserve and gold is slowly being remonetised in the global financial system and indeed may soon play a role in a new international monetary system.
In 2009, Barrick CEO Aaron Regent claimed that global production had peaked in 2000.
He told the Daily Telegraph newspaper at the RBC's annual gold conference in London that "there is a strong case to be made that we are already at 'peak gold'."
"Production peaked around 2000 and it has been in decline ever since, and we forecast that decline to continue. It is increasingly difficult to find ore," he said.
Ore grades have fallen from around 12 grams per tonne in 1950 to nearer 3 grams in the US, Canada, and Australia. South Africa's output has halved since peaking in 1970.
Peak gold may not have happened in 2000. Nor may it have happened in 2011. However, the geological evidence suggests that it may happen in the near term due to the increasing difficulty large and small gold mining companies are having increasing their production.
It is also signalled in the fact that most of the larger gold producing countries -such as Australia, the U.S., South Africa, Canada, Peru, Indonesia - have all seen production drops in recent years.
China and Russia are the two only large producers to have seen significant gold production increases. As sizeable ore deposits that were left untapped during the Communist eras are mined today.
U.S. Annual Gold Production
Peak gold has yet to be considered and analysed by the international financial community or factored into markets. Western nations and South Africa have already reached peak gold. There is a real possibility that it will happen globally soon. This should lead to much higher gold prices in time and gold’s inflation adjusted high of $2,500 per ounce remains a realistic long term price target.
The fact that peak gold may take place at a time when the world is engaged in a peak fiat paper and electronic money creation experiment bodes very well for gold’s long term outlook
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If I was Russia-China, and I was stockpiling gold and doing other important moves to position myself to have de facto control over the physical gold markets/pricing one day very soon, and the U.S. was already doing all my heavy lifting for me by artificially holding down the price of gold, then I'd be damn careful not to spoil 'a good thing'.
I would buy and mine domestic gold and silver and hoard them like a madman, but only 'declare' a small portion of my actual holdings. I would keep doing this as long as the circumstances favored it. I would always remember the Asian/Russian currency crisis of 1998/1999 and I would act so as to immunize myself against anything similar.
I would not do anything in the way of verbiage or actions to needlessly upset the PM markets, either in the bull or bear directions.
Then, at the most opportune time, after I was sure I had de facto control of the physical gold and silver markets, I would announce my holdings and invite an independent audit to prove my position, at the same time insisting on such an audit of the U.S. and Fed for their gold holdings.
Then I would announce the launch of a new, modern gold/silver standard for the ruble and yuan, probably featuring a minimum % of backing (like 10% or 20%) for these two currencies.
Then, once my new standard was adopted by my trade partners, I would simply wait out the demise of the petrodollar. When that happens, gold and silver will surge to new perpetual highs ($4000 gold and $200 silver). I would then announce that I was increasing the gold/silver backing of my two currencies (ruble and yuan) to match the new, widely-accepted real value of gold and silver.
This would spell fiat currency doom as investors rushed into the new standard. I would control the financial stability of the rest of the world. I could stomp on any fiat currency I didn't like, and invite participation in the new standard for fiat currencies I do like.
Gold and silver, and also rare industrial metals, are the key. That's why Russia-China are doing what they are doing now. They have a strategy, and it's very compelling. They are patient, deliberate and determined. They will control gold, silver, rare-earth metals, and energy resources - they will achieve a checkmate of the West.
Anyone following their lead is going to be positioned very well.
US has $60 trillion in debt (give or take)... eat that Commies!
Peak Silver ??????
At least the Western nations have Gold Body paint.
Does the US Dollar collapse when we run out of T&A?
Inappropriate Insta-Leaks!
These smoking hot body paint pictures haveFrom the article
"Unlike oil and silver, which is destroyed in use"
and yet the SOB refuses to get an erection and break the mythical $20/ounce barrier
In 2000 Silver traded for $4/oz. and change. with an interday low of $4.35; or something. then in 2001, it did it all over again; interday low of $4.35; for the year. What happened next? Patientce Grasshopper, patientce.
The Western Banksters have used the phony paper Gold markets to crush the price of Gold and therefore the profitability of mining it.
Combined with the ramp up in the shadow tax of petroleum costs this is a concerted effort on the part of the fiat fairies to destroy tangible assets.
They want everyone on 100% digital binary fiat money so it can be tracked, taxed, bailed-in, fee'd, and/or confiscated.
The first thing you have to understand about the serious players in the Gold Market is; Everybody Lies. It's like going to Honest Samuel's used car lot to look at his cherry 1959 Caddilac; you say, "well, it's a nice car, and maybe ti's true that someday 1959 Caddilacs will be classis cars, but how many of them do you have, already?" "Oh, none, says honest Samuel, none at all; that's the last one". Actually, there's four more of them out on the back lot getting a 39$ spray paint job and some new seat covers. Nobody anounces how much gold they really have.
When you wage war against Russia you try to crush gold & oil, which is pretty impossible when you're waging war to push fiat, we cant win by printing.
Any disruption in energy could also knock some players out of the game.
But not Russia. I remember when the Soviet Union used to sell some of the output of their Gold Mining operations through the Moscow Narodny Bank, in Zurich, I believe it was; it might have been Geneva, but I think it was in Zurich. They had to do this to buy stuff because the Ruble wasn't a clearing currency. For many, many years now; not one ounce of gold has come out of Russia. I hope no one is foolish enough to believe the "official" reserves they make available for your amusement. It's well know in modern, (Putin's) Russia, that gold mining is a strategicly important industry to the Moscow leaders; and employment in the mining industry is sought after and competed for. The wages and living comditions are very good. Health care, too. Whatever the output was in Soviet Russia; and it was high; it's higher now. they're pounding their Siberian hard rock deposits.
Peak gold? Didn't anyone tell him about asteroid mining? Or filtering the nano particles out of the oceans?
There's plenty of gold, or so I've been told.
Aye; and if wishes was horses, beggars would ride. or so I've been told.
How much does asteroid gold go for per ounce?
Don't know. A trillion per milligram or so.