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Aussie Gold Production Surges To Its Highest Since 2003
Amid a booming housing market (home prices +14.4% YoY), and busting economy (PMI 44.2 from 55.1 2014 peak), Australia's Gold output in 2014 surged 4% to its highest since 2003. As Mining.com reports, the world's no.2 gold-producing nation (after China) has been forced to increase the grade of ore they were targeting and push their processing plants even harder, and mining consultants Surbiton Associates warns "it's not all good news."
Housing is booming out of control...
The bottom line is that Australia's housing boom is racing away like an out-of-control freight train. So-called "macroprudential" constraints on bank lending, which place a soft limit on credit growth at four times current wages growth, have had zero impact to date.
In July 2014 Glenn Stevens warned in a speech that it "would in my opinion be good, for a range of reasons" if the "slower pace of growth in dwelling prices" observed in May and June, which proved to be a temporary blip, "did persist for a while". Stevens said he hoped for "unremarkable performance on [house] prices" for the "next couple of years". I wrote that "he must be a preternaturally optimistic character".
Since Stevens' July 2014 warning, Sydney property prices have inflated at a 14.4 per cent annualised pace, and 10.5 per cent in Melbourne. National price growth has not been far behind at 9.3 per cent.
But the economy is ugly...
And now gold output is surging, but as Mining.com reports, that's not necessarily a positive signal...
According to Sandra Close, director of mining consultancy firm Surbiton and Associates, lower prices forced Australian gold miners to increase the grade of ore they were targeting and push their processing plants even harder.
However, Close warned there was a downside to producing gold in this manner.
"Superficially, the figures give the impression of a healthy and vibrant industry but you need to dig a little deeper to get the whole picture. It’s not all good news," Close said.
"Higher grades and greater throughput certainly lift production but lower grade material becomes uneconomic, so mine lives are shortened."
Close said the high level of unemployment in the gold sector and the “waste of trained people” was also cause for concern, with the proposed gold royalty hike in WA set to make matters worse.
A final WA state government report on royalties is expected to be released soon. The current royalty rate is 2.5 per cent, with any increase set to cause an industry-wide backlash.
Gold miners have lobbied against royalty hikes, saying that there are many small producers that could not afford additional expense on marginal profit ratios.
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I'll be buying.
The real key Aussie "industry" is the housing bubble (and the associated bank share bubble). And it's becoming farcically circular at this point. Financials now constitute almost half the stock market, and "investors" constitute more than half of property purchases. We can all get rich by buying/selling property and bank shares to each other, at prices driven ever higher by increased debt, in the best pyramid scheme ever.
Check out my blog on Australian financial crime:
http://drbenway.blogspot.com/ncr
Fortunately this time its different and we can keep buying and selling houses and bank shares until we are all a country of Billionaires....how clever are we in the lucky country, if only other countries could be this clever.
P:S Dr, love your Blog
Our terms of trade are further deteriorating with current depressed coal(both met and energy),iron ore and it should be obvious to anyone with half a functioning brain cell that we have a massive structural deficit issue.
This ends badly.Yeah it is a good blog Aussie kiwi.
I know so many young couples leveraged to their eyeballs and beyond living paycheck to paycheck and earning decent coin,living the dream.
You're the Man, Dr B!
Now, if Landcom d i e d a miserable death and the neg gearing rug pulled out from under them all, they'd all be fucked, well and truely fucked.
Aussie 'roo is consistently one if the mist beautiful new coin issues every year. Start a collection if you haven't already.
I'd love to but that crashing employment means that, while we produce beautiful gold, no-one here can afford to own it.
When did a four per cent increase in anything become a "surge"?
Just yesterday I was driving along at 30mph when I suddenly felt in need of a bit of a surge. Pedal to the metal, and soon I was surging ahead at (30 x 1.04 =) 31.2mph.
Man, what a difference. It was surgical.
in post gold rush era, 4% is about as elastic as this industry gets
+10 for "surgical."
So when there is a higher price for gold they can target the lower grades again.....
Lloyd Christmas: That's a lovely accent you have. New Jersey?
Super Model: Austria.
Lloyd Christmas: Austria! Well, then. G'day mate! Let's put another shrimp on the barbie!
China still has a GDP above 7% and they just printed above 50 on CPI and PPI ,lowered their RRR ratios, and the RBA is still so insecure that they chose to hold rates and ellect a fiscal conservative? I'm being sarchastic.
I personally like Tony Abott. The guy has a set of brass balls. I'd take him over Mr. Yellin in a heart beat.
I like Abbott also. He's forced to walk an ever-shrinking line between being a genuine Roman Catholic, Austrian-economist and a populist suck up to the USA. I don't envy him his position or morality.
Not a fan of Abbott. For the reasons you outline.
And then fact he gave an $ 8 billion "grant" to the RBA immediately after taking office.
And he's a monachist. He god damn knighted Prince Philip for Christs sake.
Nuf said.
I'm a monarchist. I like monarchy.
yeah abbott is a such a great guy, he should fuck off to america, that he wants to turn australia into, and fucken run for leadership there, hes a mental retard should fit right in.
We've already got more mental retards in leadership positions than we can handle, but thanks anyway....
No worries, he'll soon be replaced by Malcolm Turnbull. Our new carbon tax will turn the ship around in no time. HAHA!
Tony Abbott is a two faced lying fucktard. Fuck Tones Abbott, and his family, since, he claims to be a family man. I know many 'family men' with much more honor and get much more respect than that warmongering fuck Tones Abbott, the prime minister of oztralia.
Don't hold back mate, tell us how you really feel.
Only time I've ever down voted you Yen,Abbott is a cunt and a dangerous stupid one at that.
The gold miners complain about meager or non-existant profits, yet seem to have no problems with a third party (with ZERO interest/stake in the sector) setting the price at which they must sell their product. This is especially puzzling in a market where demand for physical product outstrips yearly mine supply. I would have to assume that the CEOs/BODs of all the majors are on the payroll of those that insist they be supplied with the "Precious" at (or below) cost of aquisition.
Nat gas ,real estate, agriculture, you commies need to get off the .gov teet. Australia is doing just fine.
I'm long everything Australia. The states are are much worse off then you're being told, or chose to accept.
P.S. I just shorted usd/jpy again. It's slipping below key support levels.
No opinion on the state of all things ozzy, but the usd/jpy looks set to roll.
Never been offered a nipple slip by .gov, but have been raped relentlessly by them since I assumed responsibility for myself (and them).
The mining of only the higher grades indicates that future production may drastically diminish. Who doesn't think that future mining costs will be a lot higher, making the lower grades (far less than 1 gramme/tonne) unprofitable unless the gold price skyrockets? Many mining execs have claimed privately that a healthy industry needs at least $3000/ounce. Be patient stackers; the time will come.
"... out of control ...."
seems alot of that going around with unbridled greed and 24/7 fiat currency printing. It's amazing gold isn't $5,000 by now.
I'm not sure what $5000/oz will mean when the dollar has faded into oblivion. I do know that an ounce should buy about 250 pounds of beef or bacon or about 50 barrels of wheat. Those are the only numbers that will matter when the endgame "ends".
If you want to understand what an ounce of gold should buy, see the Excel Cole report at
http://www.vanderbilt.edu/econ/cipr/cole-historical-data.html
Gold during this 150 year period was $20.67/ounce. I used an average from 1800-1861.
These will be the starting points for revaluing all commodities when the reset occurs.
Great link. Thanks.
The only solution that the Gold Bugs will propose is Buy, Buy, Buy.
If the dumbasses who bought at $1,800 had only bought MOAR, MOAR, MOAR the price would have gone UP, UP, UP.
Down a third and production increases.
How many trucks have they backed up by now?
BTW, it will only be a few minutes before a BUG comes along to announce that increased production is evidence of price manipulation by the Central Bank of _ _ _ _ _ .
If you're upset at having bought Gold at $1800 and are looking for a quick sale, I'll happily take everything you've got at the historically accuracte $300/ounce
As a Western Australian I wish to thank the gold bugs for their donations. Especially, if my state manages to increase the mining royalties and production continues to ramp. I will sit back and enjoy the socialist utopia that all the gold royalties help to pay for.
Thank you gold bugs. You really are too kind.
And don't say I didn't tell you. I've invited you to come over numerous times.
The higher the gold price goes, the more royalty money my state gets. I can enjoy the full benefits of gold without ever owning it or even touching it. Let the good times roll!
Buy moar gold!!!
Yes, because Gold is by far and away the biggest contributor to WA state revenue.
Looks like you got the worse end of the trade. The fiat Autralian Dollar you hoarded dropped 25% since last year at this time.
People still hoard fiat in this ZIRP, post-bailin era?
Western Australia has the gold and there's only 2.5million people here. Come join the party.
Yep, couple of new hospitals that now see over capacity presentations.
Douchebaggery adds for new police recruits.
Massive amounts of new road building for more single occupant cars to fill.
You should see the holiday traffic.
Socialis utopia indeed.
Dont get me wrong, this place is awesome for entirely different reasons.
Why should the land down under be any different than the rest of the 'offshore' world for the Chinese? And it is so much closer to escape to when and if circumstances deem that a necessity.
Tony...what an intellect, we are lucky to have him.
http://lafm.com.au/fairsy-and-jules/44264-video-tony-abbott-president-of...
They are talking about an 11 ton increase in the article. I guess that is a material gain. But doesn't seem big enough to warrant a story.
Australia's mining is hot too
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