This page has been archived and commenting is disabled.
"Peak Gold Production" Hits In 2015
Several days ago we reported that as a result of persistently lower gold prices, driven down by a seemingly endless supply of paper gold (in the form of ETF selling and Bank of International Settlement "price discovery") offsetting a seemingly unbridled appetite for physical gold, not only is one of the biggest marginal suppliers of gold - Chinese producers - about to take an extended hiatus, but first one and then many "developed" gold miners are about to throw in the towel.
As UBS' Shanghai analyst Lin Haoxiang said, "Falling prices are cutting into some high-cost private mines in China, while some big miners chose to reduce costs by reducing jobs and capital investments." As for the North American gold miner defaults, they have already started with Canada's San Gold warning its creditors it is about to stuff them with a lot of unrepayable paper.
However the unwind plays out, it is becoming increasingly clear that just as the crude oil market is set for some violent times ahead as producers lock into the defection phase of the Prisoner's Dilemma and flood the market with supply in an attempt to crush the weakest competition, so the gold market is set for many upheavals, the first of which, however, may be what Goldcorp defined in a recent slideshow as Peak Gold.
The only difference is that Goldcorp does not look at it from the perspective of Game Theory, where it is every miner (and their balance sheet) for themselves, but as a function of a 20 year lead-in development time following the period of peak gold discovery which took place in 1995. End result: "Gold market forecasters are expecting peak production in ~2015."
And then there are of course, the practical implications of gold miners who are living if not on borrowed time, then close to it. As the following chart of the gold industry's "all-in sustaining costs", when one takes net debt and the interest due on it into consideration, it becomes clear why gold has managed to find the $1050-$1200 region as support: drop the price of gold below that and suddenly 90% of the entire gold industry becomes unprofitable.
None of which means that gold can't - or want - drop below any given price, or slide into the triple digits. As we showed earlier, the new normal "markets" are so rigged - with the blessing of central banks no less - that attempting any rational predictions, especially when it comes to the one susbtance most hated by central bankers through the ages, is painfully meaningless.
And we are confident that before all is said and done, gold will surely plunge to even further manipulated lows because in the current market, where one can create paper gold futures contracts out of thin air, there is nothing to prevent just that. Which is why the following table showing gold miner net leverage will be quite useful in the years to come as the race to the prisoners' dilemma "defection" bottom - one in which only those with the best balance sheets survive - enters the final stages.
In any event when all is said and done, gold production will be far lower in a few years than where it is now. The only question is how will central bankers orchestrate a parallel decline for physical gold, because even with all the paper manipulation in the world, the supply and demand curves for the underlying commodity can be ignored only for so long.
- 32258 reads
- Printer-friendly version
- Send to friend
- advertisements -





good. I don't want much more of it out on the market.
Nice to know Bernank is in the hamptons sipping on courvoisier and stacking ASEs...
tradition!
Assuming CB's want phyzz to be priced lower, i.e. Which may not be the case.
Why worry about physical Gold when a printing press can stamp out all the paper Gold needed to sustain the scam.
Bernank has a swiss storage account already set up 8 years ago.......he's set for life with gold. They all know where this ends up.
Peak gold = emerging stack growth
how do you know this about bernanke and is this source reputably true?
You're posting on the source already chief.
Peak Gold. Just in time for the Shanghai Shock to the Gold Market Jim Willie is predicting...
my roomate's half-sister makes $65 /hr on the computer . She has been without work for 7 months but last month her pay check was $14940 just working on the computer for a few hours. you could try this out... www.works3.com
Why your roomates cousins brothers daughters step child? Why isnt she spreading the pyramid bullshit? Those that can, do. Those that can't (you in particular) verbally masturbate.
My roomates half brother is Chief Inspector for tax evasion at the IRS.
HE wants to know your real name, and will get it from Zerohedge.
Don't you think it will probably turn out like oil? You know, some magical, inifinite supply will turn out to have been there all along, and we were just bein' fucked with for 40-odd years, and the price will drop back to 35/oz?
no.
wha ? ...... nothin .gov would love more than to stick it up the arse of all you doomer gold hoarders....!!
I am not a hoarder, I am a collector and connoisseur of a metal of a particular hue.
shocks - those frigging aliens again dumping their waste rock on earth??
The whole cash for gold thingy sure died fast. Around here, they have all been replaced by title loan sharks. Progress.
I think TPTB will be OK. There's a good supply of tungsten.
Well that run up to 1900 did a pretty good job of shaking out all the 'old gold' that was cluttering up joe sixpack's living space. Now that it's all be converted to IPads and flatscreen tvs and new Ford pickups and biggie-sized burger/fry combos, all they've got left to grab is the GLD inventory, but that project's well underway - just requires keeping the price down now instead of running it up.
"all they've got left to grab is the GLD inventory"
Ha! And what GLD inventory would that be?
The "paper count"...
Or the real impartially-verified physical count?
I would venture to say there is a LOT more of the former than the latter...
And the difference is growing every day!
Abiotic gold?
There is a near infinite supply....don't believe me, just look up at the night sky...it's being 'made' all the time. I bet it would only take $5,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000,000....... to go up there at just pick it up from a nearby object.
My ounces already say $50 on them.
That's pretty awesome, you'll be 15 bucks to the good on every one of them.
By my calculation he will be $29.33 to the good on every one of them.
Gold was priced at $20.67 before that Commie bastard socialist FDR raised the price to $35.
That is where it needs to be.
Come on DEFLATION.
Even the drugs Al Huxley took wouldn't make him believe that.
That said, I think we're seeing a lot of deflationary signals in many commodities. Clearly we're living in a bizarro-world hybrid financial system, where there's inflation in stocks, housing, cars and food for the most part, but deflation in many commodities and financial alternatives. I won't be suprisied at all if gold drops another $200, nor would I be suprised if it went up $500.
The way I see it, there's dollar sources (the Fed, loans, and savings) and dollar sinks (assets, commodities, and consumables). The dollars sourced by the Fed are clearly going into equities, as are most of the dollars loaned to corporations doing stock buybacks. Large-scale savings is interesting, because those dollars are somewhat out of the control of the Fed, especially if interest rates are low (presuming only two things, high rates and flights to safety, drive people into USTs) non-US savers had been directing their attention at commodities, but now that their own economies are sliding that interest is diminishing, and down go commodity prices, including gold.
My intuition is that gold goes lower, that some producers will be able to stay online due to lower energy costs but most countries retain local production, keeping it off the market and keeping gold from declining too much.
Then, the financial system breaks, either due to deflation wiping out banks from all those Fed dollars getting squished out of stocks and vaporizing, or through inflation when those dollars land somewhere in what's left of the real economy, or my favorite, the Fed keeps funding UST purchases and the printed dollars cover government spending and the markets wake up to how much dilution is happening and go elsewhere.
There's no sense in saving dollars at ZIRP. Most investors are in the stock market and everyone else is blowing their money on BS. There's no other game in town.
Those with access to the money are making big gains in a rigged casino, everyone else is begging for scraps to spend on debt service and expensive food, healthcare and education costs.
The dollar is debt - saturated. Like a monopoly game we have to keep playing although one player owns everything and is also the bank, and keeps writing $100 and $500 on little scraps of paper to pay everyone as they pass go, even though he knows he'll just get it back as soon as rent.
It's simple.
Price discovery.
SHTF
How much food will an ounce of silver or gold buy?
Now that, really, is price discovery.
Having said that, just for comparison, how much food will a rectangular piece of paper get you (no matter how much fancy ink it has on it)?
Maybe their goal is zero supply, a price of $0 per ounce, and an infinite demand for physical?
Not likely, given that the stuff is manufactured deep in the bowels of nascent stars. Having said that, never sell technological advances short. If we can figure out how to economically extract the stuff from the ocean (there is approximately 1oz in 57,000 tons of sea water), then you might be on to something. I'm guessing if gold ever hits $15,000-$20,000 an ounce, you'll start seeing a lot of ocean gold platforms. Who knows, might be sooner than we think.
If gold hits $15-20K don't you think things like hamburgers will cost $50-60? What does that do to the cost of ocean gold platforms?
no way
The Gold industry hasn't figured out new ways to frack, compress, or boil new Gold out of the ground... very few improvments in Gold extraction technology in decades - other than new/recent green technologies that require less chemical treatments.
I take it you are not an optimist!
Physical Gold is created in the heart of an exploding star (Super Nova). Then it travels through space where it eventually falls to earth. Considering how it is created and is drawn to a gravity sink such as our planet, One would think it would be worth a lot more than it is today.
What else are gold bugs going to predict but peak production leading to increased value of an already scarce commodity.
Should I buy gold or silver? or copper? (my dad's a plumber he could use copper)
BTW, I notice that GLD is down to 712 tons,from 720-ish before Christmas, so looks like the pilfering of the last great cache continues.
isn't 1200 "calories" like starvation rations in the gulag
I wonder how many of those mines also produce silver as a byproduct?
If they shut down the gold mining, a minor disruption in the silver market will have an effect? As all of you know--silver has a real use.
Cutting just a little bit out of than small market could disrupt things.
Just a thought.
You're quite right, but I have a slightly different take on it. Because silver does have so many uses, other than for coinage and jewelry, and given that its above ground, available supply is actually less than the available gold, there currently exists a severe silver deficit in the physical silver market. Once this becomes common knowledge, the industrial users (who are likely hedging in the paper market) are going to stand for physical delivery and are going to be in for a rude surprise when they discover they can't have their physical silver, because it doesn't exist. That's when all hell is going to break loose in the metals markets. It's going to be fun to watch.
More copper than gold mines produce silver as a byproduct.
I recall all the supply/demand/marginal revenue/break even curves that were tought in college economics 101. What do they talk about now?
Selfies.
Gold/XAU Ratio 17.36
The miners have been absolutely annhilated. Doubt many of them will survive this relentless suppression and manipulation unless gold skyrockets in the next year or two.
Please, my VC freinds just told me that "gold has no place in modern finance".
I am not kidding, they all believe gold to be a "barbarious relic". All products of ivy league schools, all extremely wealthy.
How can I argue with that?
You can't, I've run into the same. If you completely buy into the fiat system (and they have) it really does have no role.
The problem is they also believe in free markets (not only in the sense of unhindered exchange, but also that there's no corruption, information flows freely, etc) and we know that is absolutely not true. Once it's accepted that it's not true, then valuations can't be trusted, and once valuations can't be trusted counterparty risk becomes very real. Once counterparty risk becomes real, then you've got a compelling argument for physical holdings of whatever. It can be pointed out that you can set the value of everything at zero, and in the end whoever is holding a tangible thing that's useful to them is still doing better than the one holding promises (though this argument is usually a lot more convincing in getting people to hold weapons and food than it is gold.)
It's rare for the brain-damaged to become enlightened, but on rare occassions you'll see the wheels turn and the realization click, and then there's a "holy fuck" realization.
I get that, but for right now, those "brain damaged" folks are flying between resorts in their own private jets.
Not For Much Longer.
Besides when the Shit Hits the Fan I am certain that some are going to be "Bird Hunting" near the regional airports and be knocking those private jets out of the sky.
Well, whoop dee fucking doo.
Within a circle of say 20 mile radius of where I'm sitting there are more interesting places to see and things to do than I could manage in 3 or 4 lifetimes.
Those fucks only do it to show off to people who are impressed by such things.
Better to enjoy life on your own terms than someone else's, I think.
That you can't put your ego aside long enough to realize that they are flying around on the value of your future earnings is not something to be proud of.
You can't argue with "stupid", it tends to turn out being an excercise in utter futility. I have tried. Academia, at least the majority I have ever interacted with, see themselves as superior to a serf like myself and above thinking outside the box on subjects such as this.
Academia=gov. employs. Paid to think that way.
Were they Pets.com VCs?
You could have given them the hockey stick talk. VCs love that shit....
simple tell em, FIAT = TRUST/BELIEVE.
remove the trust, on a non backed money, what remain, nothing, panik, bankrun, hyperinflation...
on backed money, phyz remain, more ez for em to manipulate on trust/believe that on phys, a trust is ez to manipulate... MSM do the job every fucking day on earth.
Ask them why the world's central banks have chosen to retain their gold?
Ask them why they want to repatriate it now?
Ask them if they don't trust those central banks' opinions, why do they accept their personal checks (fiat currency)?
Ask them whether brokers tend to talk their book?
Ask them whether a Central Bank is a broker?
Ask them whether the Ivy League professor who taught them about gold was connected to that broker, the Central Bank?
When the CB, its minions in academia, and its economists trash gold, while collecting it, what does that tell you?
Do you believe what they say?
Or do you believe what they do?
Aren't ratios for linear relationships? It doesn't look linear to me, it looks like a power relationship, like 2x ETFs are squared, e.g. 10% of the underlying translates to 1.12 of the leveraged ETF, which is 1.21 = 21%. So in this case with a 2.64 power leads to a non-linear relationship we can now put into an equation.
Just eye-balling it I'd say +/- 3% on the gold price or +/- 9% on XAU value,
XAU = (2/475 x gold)2.64
or gold = XAU1/2.64 x 475/2
So it makes no sense at all to even look at XAU vs GOLD ratio. It's not a value, it's a messy graph. To get an actual value worth plotting & tracking you'd actually use 2x gold / XAU1/2.64 which is 475, so probably a range of 470 to 490 will appear in a graph of that ratio.
there are quite a few explorers, developers, and junior producers with better metrics than GG on net debt as % of market cap.
Annual gold inflation due to production is only about 1-2% of the total stock.
Sending all producers to bankruptcy by surreally low gold prices will have to result in way more boating accidents to reflect the deflation of the economy
Hold on just a second here!
I know that I am a little slow on the draw, but I heard an expert say once that all one needed to do was increase volume to cover costs!
So easy even the un-fed can do it.
I heard another expert say that when the price goes down the miners just have to find higher-grade, lower cost deposits to mine, so they can still make money at the lower costs.
I think most mining execs are moronic douchebags who don't have the slightest notion about how they're getting fucked over (or are complicit in it) but you have to cut them some slack given that they work in the only item in the world where price isn't determined by demand - where demand can go up with price going down and somehow everybody thinks it's normal.
Keith Neumeyer, CEO of First Majestic gets it and is trying to do something about it.
https://www.youtube.com/watch?v=4cIpAL8UVvE#t=16
The biggest gold miner in the world (Barrick) is most CERTAINLY in bed with the manipulators. Where do you think all the "deep storage" gold is located?
On another note... it takes about 25 gallons of diesel to produce an ounce of gold. With the recent drop in fuel prices, we should expect to see total production costs from the biggest miners to drop between $30 and $50/oz. per ounce of gold produced. As far as I can tell, this has not been priced into the mining shares market.
Someone's priced it in... take a look at Franco Nevada. They're in oil, in gold, oil and gold are both down, and Franco is... not.
Franco Nevada is not a producer. They make their money regardless of the price of the product being extracted - at least until their holding goes FTP
daddy bush sits on the barrick board....enough said.
To retain credibility the bullion banks need sources of gold.
To retain the paper-trade they must have the credibility.
They cannot bankrupt the miners without self-destruction.
In the event they blow-up both themselves and the miners, the paper-gold trade will lose credibility, gold will rise, and resources will appear for new miners.
Hard as they may try, it is as impossible to separate Gold Supply from miner's as it is to separate effects from causes.
It simply cannot be done.
Who cares about a barbarious relic? At this point what difference does it really make?
/s
I thought the Pickens inverview on oil the other day was laughable for the same reason.
Every time someone says 'Peak-something' I can't help but think they are a moron who missed econ 101.
Pickens, a billionaire, was called on his 2005 announcement that Peak Oil had arrived. The interviewer highlighted that production had in fact increased since Pickens called 'Peak Oil'.
Laughably, Pickens insisted he had been right about 'Peak Oil' and said that oil production did in fact peak in 2005...except for all the new production.
Production peaked except for all the new production? I guess I can't argue with that except to say that Pickens was absolutely naked as he said it...except for the suit he was wearing.
Here's a fact. We don't know how to actually destroy anything, even if we wanted to. The very best we can do is separate it into its base elements or into energy. The fact that no one knows how to do this is actually a law of physics - conservation of energy, and all that.
So, if you believe that paper gold, which requires bullion banks who in turn require miners to survive, can bankrupt the miners globally, then you ought to move to cash to buy mining equipment. As sure as night follows day, soon after the miners bankrupt Gold will rise, and you'll sell or employ that mining equipment at a premium.
The truth is simply that there is no monetary or economic solution to scarcity.
The laws of Nature and physics are very clear on this. As far as sustaining ever increasing people at a decent standard of living will innovate or die. Yes, they teach you this in ECON 101.
hmm...
we no longer innovate, we .apps the worldwide while factories go full robots.
we prevent dying society by keep feeding world. EBT anyone ?
as i say, as long you keep masse full stomac state, they can go forever, cut the food, party begin.
Scarcity drives price rises, which in turn mobilize increases in supply.
Saying "Peak fill-in-the-blank" is to put your finger in the scarcity part of that cycle and declare it the end of history.
Supply and Demand is the lesson of ECON 101. And price is the squeaky wheel telling us where grease is most needed - also in ECON 101.
Things don't reach a peak, and then disappear.
Things reach great supply, leading to ubiquitus use - a large portion of which is always unecessary in hind sight, and occurs only because of the glut. This leads to supply restrictions, scarcity, price rises, and then new supply.
Whether oil or gold we do not buy them for what they are. We buy them for what they do for us.
Central Banks and Central Planners are fallible men, not gods. That is the bloody, corpse-heaped, mass-grave-ridden lesson of the twentieth century.
It is they who have put their thumb on Gold's price scale to declare history's end.
Their tenth-generation descendants will have been in their graves for a thousand years, and history will not have ended.
And today, deliveries of physical are delayed, or not met at all, because of a thumb on the scale.
But no thumb can bear the whole weight of humanity. The thumb will break. And the failures to deliver currently happening are the cracks in the ice beneath the feet of the central banks.
If you are under 50, your grandchildren will learn about this only in history books.
When the ice fully breaks, the lack of gold supply will be laid bare, price will soar, people will be panning every creek, rediscovering every 19th century mine, and 'Peak Gold' will seem to be the work of tin-foil hat people... until they get their hands on government to confiscate the mineral rights.
Like Pickens with oil, never forget that industry insiders benefit from artificial shortage.
And that is why the freed price, when it comes, will dramatically overshoot to the upside.
The greatest transfer of wealth the world has ever seen is coming.
Some Energy cost for miners cut in half in recent months with the oil drop, production cost should be way down while gold has been holding at $1200 for 18 months... Any of the above take that into account?
Wasn't gold at $300 last time the nasdaq was this high? Nasdaq is rigged to go up, gold rigged to go down, gold still wins... On a long enough time line.
Maybe its different this time?
except all the 'new' production is lower than ever before, except at the early stages of discovery EVER, showing the other side of the bell curve, showing peak production happened.
I think the shareholders of all mining companies should file class action lawsuits against the CEOs of these companies. The miners could put a stop to the paper price manipulation by simply refusing to sell at these prices, other than what they need to cover basic expenses (First Majestic did it last year). I'm guessing they are either in fear of having an unfortunate nail gun accident, or they just don't give a fuc#. And what's with the idiotic companies that are barely above water, selling at below cost, and still paying some meager dividend. Keep the frwaking dividend and save the cash; you're going to need it.
"The only question is how will central bankers orchestrate a parallel decline for physical gold, because even with all the paper manipulation in the world, the supply and demand curves for the underlying commodity can be ignored only for so long."
For as long as they can and probably past your's and mine lifetimes.
It won't be satisfying to me in the least to be able to say,"I told you so" on my deathbed.
http://www.bloomberg.com/news/2014-12-30/u-s-mint-gold-coin-sales-head-f...
However, 2014 silver eagle sales set a record of approximately 44 million. So......?
Earlier this year Goldcorp attempted a buyout of Osisko. Ultimately, Goldcorp lost to a combined offer by Yamana and Agnico.
Goldcorp cooly walked away from the offer saying they'll wait for better deals.
Interesting article. The bottom of gold is still a long ways down even though a multi-month bear market rally will carry the yellow metal up for a little while longer...
http://www.globaldeflationnews.com/gold-elliott-wave-update-for-week-end...
TA and EW are useless in rigged markets. Physical gold is certainly not in a "bear market rally". That is absurd.
Try this. Hope it helps you.
http://www.paulcraigroberts.org/2014/12/22/lawless-manipulation-bullion-...
Rigging is a pattern & once calculated must be plotted using technical analysis. Hence... http://imgur.com/qXy0cxo,QuOILO8
The time to buy gold was back when it was $200 to $400.
You could buy now, but I don't see it spiking to another level unless another crash happens and they have to print even more money, which might be another 5 to 10 years away.
Great, another dickhead telling people what to do.
The time to buy gold was back when it was $200 to $400.
You could buy now, but I don't see it spiking to another level unless another crash happens and they have to print even more money, which might be another 5 to 10 years away.
oh? http://imgur.com/qXy0cxo,QuOILO8 ... we'll see.
At $50/bbl there is no new oil supply, and we have peak oil.
At $150/bbl there is a lot of new supply.
At $1200/oz there is no new gold supply and we have peak gold.
At $5000/oz people will be prospecting their local creeks.
At $10k/oz you'll have an explosion of production.
Precisely what will happen at the end of confidence in fiat currency is unknowable.
If the result were a multiplicity of currencies, gold would need to be over $10K/oz to back even a few of them at any reasonable percentage.
If a large part of the world wanted a new gold standard you can multiply that. For instance, if all the gold in the world were in the US, and the US wanted to return to the lawfully-mandated 40% backing, gold would have to be $54K/oz...if the US had all the gold mined from Adam to present.
Now, before you say "peak gold" ask yourself how much gold would be available at ANY MULTIPLE (>1) of today's price.
Peak Gold?
No.
Peak BS? Possibly.
Peak Central Bank? Very likely.
I don't own any gold, other than jewelery etc. This summer I was considering selling 10,000 bushel of wheat @ $ 5.50/bushel (I am a farmer and had the physical commodity, not paper). Instead, I kept it in the bin and waited out the Goldman Sachs ass pounding and it finally got to $ 6.73/bushel where I sold it all for January delivery. So, essentially I'll have $ 67,300.00 from the sale, do not need the money for operating loans as am debt free. Putting it in the bank and paying them to watch it for me makes my fucking skin crawl.
I'm considering taking the entire wad and buying physical gold. Really hate the coins because seams you take an ass whooping because it's a coin.....simply want the most oz I can get and not get raped buying it....hate the thought of being upside down in it before I get it homeand stacked, ready for the upcoming boating accident.
Anyway....Any ideas out there on what to spend my wad on and how much over spot price will I be upside down? Or do you gold guys just don't give a shit what the price is, just like having the stuff sitting around looking at it IN CASE SHTF and you'll be able to convert it into something you need?
Or, do I just go out and buy $ 67K worth of canned goods, ammo, tampons, booze etc?
I bet those tampons will be worth far more than the gold in a SHTF scenario, think having a virtual harem, but it's good to diversify. So, what I would do if I were you, spend $20K on Canadian Maples both AG and AU, and then stock up on tampons and the other stuff with the rest.
GO long Treasures in Heaven - where thieves cannot steal it.
First 2011 then 2012, 2013 and 2014 were going to be the moon shot years for gold but nothing happened. For 2015 there is a heightened sense of excitement and everyone is convinced this will be 'the one.' Of course no one knows and it's perfectly feasible nothing will happen yet again as the CB's are still in control and the 'empty vaults' story keeps rolling along. One thing is certain and that is the whole debt based financial system will crash eventually and holders of PM's will be justified in their decision - but I'm not holding my breath that it will be this year...
May be peak gold production but probably just the start of a boom in Tungsten, lead and gold paint.
"At the bottom of every gold mine is a liar!" -- Mark Twain