First Platinum, Now Gold: As South African Miners Strike Spreads, Thousands Of Ounces Remain In The Ground

Tyler Durden's picture

Two weeks ago we showed dramatic footage as striking miners at Lonmin's Marikana South Africa platinum mine were fired upon by local the local cops, killing dozens of protesters in the process. Aside from the implications of what happens when the establishment loses control and desperate  workers revolt with complete disregard for their own safety, the strike has crippled the world's third largest platinum maker, and has cut daily production of the precious metal by 2,500 ounces. Since then the Lonmin situation has remained critical, with just 6% of the South African company's workers turning up for work last week. In the meantime, the strike bug has gone airborne, and has now impacted Gold Fields, the world's fourth largest gold mine. From the FT: "Some 12,000 workers at a gold mine operated by Gold Fields have gone on strike, in the latest industrial strife to hit South Africa’s mining industry. Sven Lunsche, a spokesman for Gold Fields, said the wild-cat strike was not directly related to the crisis at the Marikana platinum complex, where 44 people have been killed in violence after rock drill operators downed their tools to demand higher wages on August 10. But he acknowledged that “the atmosphere in the mining industry is very volatile at the moment and this may have had an indirect impact on the situation". The bottom line: "The strike was costing the company 1,660 gold ounces of production a day, Mr Lunsche said." In other words in addition to the fear of a resumption in money printing by central bankers, the gold price will now have to deal with the added fear that supply disruptions just may hamper China's stealthy hording attempts to become the world's biggest holder of physical gold, or at least at sub $2000/oz prices.

Furthermore, it appears that where the striking miners of Lonmin and Gold Fields have boldly gone, many more local unionized workers are set to go as well, in the process shuttering the biggest industry in the Southern African nation:

The unrest at Marikana mines operated by Lonmin, the London-listed company, has been complicated by a dispute between the NUM and a rival union, the Association of Mineworkers and Construction Union, a newer body that has been making inroads into the platinum sector.


Amcu has no representation at the Gold Fields mine, although it has previously attempted to recruit members there. Industry officials have said the fact that gold producers use collective bargaining to negotiate with unions should reduce the risk of the kind of dispute afflicting Lonmin spreading to that sector.


But the Marikana crisis has triggered nervousness throughout the industry, while also putting focus on what appears to be growing dissatisfaction among workers with the NUM, which has been the dominant union in mining for three decades.


Lesiba Seshoka, a spokesman for the NUM, said the union had sent a team to the KDC mine to see what the workers’ concerns were. But he said suggestions that it was related to an internal union dispute at the mine were “not true”.

As a reminder, South Africa is the world's third largest producer of gold in the world (although the output has been steadily declining year after year), and the broader mining accounts for just under 20% of the country's GDP.

Should the local workers grasp that they have the bulk of the leverage in this critical industry, it is unknown how far the metal production shutdown will extend, and how far the price of gold will rise as fears of a persistent supply contraction, coupled with once again increasing demand by both retail and central banks, spread.

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ruffian's picture

A disruption of some gold supply from mines will NOT have any material impact on price as the STOCK of above ground supply of gold is 70+ years worth. "Commodities" get consumed and have ever shrinking above ground supply in the abscense of new production. Virtually all the gold ever mined still exists so this does not apply to gold.

Black Forest's picture

I respectfully disagree.

knukles's picture

Here’s the deal as the Knukie sees it.
With the thrashing of the RP folks by the R’s, a lot of middle of the road, independent, ex-R, ex-D (a large and growing %age of the population) are going to either not vote or write in RP where heretofore they might have been leaning R.
An anyone but the O campaign.
But, the R’s needed that sector of the public to beat the O.
They lost it, kicked it out, meaning that the O might just be reelected.
Thusly, the Brenak stays around, constantly pressured by the neo-Keynesians to print like hell.
Which he's very good at, if you've missed it.
We’re entering the seasonally strong buying season for Gold.
The world is falling apart… China/Asiaw weakening, US is softening badly and Europe is dying on the vine with no help anywhere to be imagined.
Everything is worse than 2008.
All it needs is a spark.
Sovereign debt, financial intermediary crisis, run on to safer of all horseshit fiats, flight to quality any port in the storm will do, return of money not return on becomes most important.


Gold rallies.
Shutdowns will just be another albeit added plus… especially of psychological influence.


Just think, if the price gets too high the Administration can release oil form the SPR at the same time releasing Salted Tungsten 440’s from Ft. Knox.
Don’t panic, carry on.

Ahmeexnal's picture

Take a good look at that list of countries.
That's the new upcoming G15.
The rest are the new third world.

Michael's picture

You're not going to like this, but it's about steeling your and my money.

To some it is an old story, hardly newsworthy. To others it is evidence of a world conspiracy suggesting "the Mark of the Beast." For me, it's something quite humorous. It's called "The Kosher Tax."

Food that meets these strict requirements must be supervised in its production by a Rabbi and only then will it be certified as "Kosher". These foods are marked in a special way by affixing a Kosher symbol on the product's label. The most common one in America is the letter "U" inside a circle, or the letter "K" -- but there are many more.

 Because food producers must hire the services of a Rabbi to inspect and verify that they comply with these strict regulations, organizations like The Union of Orthodox Jewish Congregations collect a fee for their services. This fee adds to the cost of producing the food, which is, of course, passed along to the end consumer as a so-called "Kosher Tax".

So what? You don't buy Kosher food -- or do you?

Take a minute right now to check out your kitchen pantry or that bag of chips you're munching. If you're like me, you will be shocked to see that just about everything has one of these Kosher symbols on it. (Go ahead, I'll wait for you to return...)

It seems that just about everyone in the USA -- all 307,006,550 of us -- are regularly buying Kosher food and paying this tax. That's quite surprising, don't you think?

Manufacturers claim that the increase in food prices due to this tax is "minuscule", yet reports claim that the tax is levied on more than 400,000 products in 8,000 plants in 80 different countries. The Union (U) employs approximately 1,000 supervisors, mashgichim in Hebrew, and about 50 rabbinic coordinators. But they are not the only ones doing this. The next largest is Rabbi Bernard Levy's "Committee For The Furtherance of Torah Observance" which uses the "K" symbol. Canadian Kosher products are stamped with the letters "COR" which stands for "Council of Orthodox Rabbis". If you're in another country, chances are they have a special organization collecting the tax and affix a special symbol on your food. Here's a partial collection below.

According to New York Orthodox Rabbi Schulem Rubin:

"Kosher doesn't taste any better; kosher isn't healthier; kosher doesn't have less salmonella. You can eat a Holly Farm chicken which sells for 39 cents a pound on sale, and next taste a Kosher chicken selling for $1.69 a pound, and not tell the difference. There's a lot of money to be made! Religion is not based on logic!" - The Washington Post (November 2, 1987)

Menachem Lubinsky, editor of Kosher Today, a New York-based newsletter, said the number of certified kosher products had soared from 16,000 in 1977 to 80,000 today, including such well-known food items as Oreo cookies. He said about a third of all supermarket items were certified kosher. In 2003, kosher foods comprised about $170 billion of the $500 billion in U.S. food sales. [source]

Well, this is too weird. So I throw the question out to the public and seek an explanation. Why are 300-million non-Jews in America paying a tax that benefits a small, "minuscule" portion of the population. Perhaps there is a perfectly good answer -- anyone?

Now, now...

The "U" Tax!


© By Geraldo Fuentes for (2012) ? ?

Pladizow's picture

Stock = 170,000oz

Flow = 2,500oz/yr

Therefore, this supply disruption will have negligible effect on price!

DoChenRollingBearing's picture

+ 1

Correct!  Must be another student of FOFOA...

Ohh...  Peru is now the No. 6 producer.  Next year maybe No. 5!

EDIT: shows gold at $1689, down about a buck or so.  Nobody seems to be too excited about this...

PaperWillBurn's picture

"South Africa, The middle east, India and then into Asia!" This was where the physical was flowing while we, in the West, were becoming enamored with paper gold trading. No longer did the US Treasury have to supply ITS gold, the market was supplying gold for it. But keeping the physical flow bought up, cornered as it were, was putting a great deal of stress on the paper market of the LBMA by the mid-1990's. It's all about the flow remember, the flow of PHYSICAL that is. FOA:


Date: Sun Oct 05 1997 21:29

The Western governments needed to keep the price of gold down so it could flow where they needed it to flow. The key to free up gold was simple. The Western public will not hold an asset that's going nowhere, at least in currency terms. The problem for the CBs was that the third world has kept the gold market "bought up" by working thru South Africa! To avoid a spiking oil price the CBs first freed up the public's gold thru the issuance of various types of "paper future gold". As that selling dried up they did the only thing they could, become primary suppliers!

Dr. Sandi's picture

Personally, I LIKE kosher food. I believe it increases the chances that at least somewhere in the food manufacturing process, there's a human involved.

If it's too disgusting, the rabbi might just refuse to give that rotted batch of potato chips his blessing. God knows the FDA inspectors can't be bothered.

However, I'm not sure that South African platinum or gold falls under the kosher food program.

ToNYC's picture

What about the Halal (at the gas pump), Kim-Chi (allthings electronic) and the Cannoli tax (not the gun tax)  that is invisible but just as sure as things fall off trucks.

MillionDollarBogus_'s picture

Gold unmined means less will be available to buy.

On the other hand, new Spanish bonds will be available month after month for a long time.

Buy EU sovereign debt while the getting is good... 

PhattyBuoy's picture

Econ 101: As gold supply goes down, price goes up ... so simple even a Krugman (caveman) could understand it ... !

AldousHuxley's picture

market is only efficient in the long run.

idiots are running wild these days.

took a long time for nasdaq and real estate bubble to burst....dont' underestimate your fellow investors who are greedy idiots and also governments with power of information.




Ahmeexnal's picture

Why the hell would Spain, a country in the Maghreb, be allowed into the EU in the first place?

Oh, same reason Turkey, a country in the Middle East, is being lured into the sacrifical pit.

Same reason why german officials have been bribing finance ministers in El Salvador, Haiti, Honduras to join the EU.  Much to their surprise, central americans outright laughed in their faces and told Merkel to fuck off.

knukles's picture

I thought that was fuck me once, gringo white boys

giovanni_f's picture

Spain in the Maghreb? Turkey in the Middle East? German officials in El Salvador? You know things nobody else knows. You are indeed an accomplished source of compressed bullshit. Second to none.

Papasmurf's picture

I agree.  The shenanigans at the RNC convention have assured an Obama victory.

Dr. Sandi's picture

But wait. There's still plenty of time for shenanigans at the DNC. And the Dems tend to get a little loose during their conventions.

It should be a fun week for those who like to watch pro wrestling on weeknights.

slewie the pi-rat's picture

maybe baby_B will photograph things about town and give us sum photo-moto blow-by-blows!

doc! if you even need a caddy, i can drive the cart and roll and chew mints at the same time! 

speaking of lightweights :> Desmond Tutu Calls on ICC to Try Blair, Bush Over Iraq


the mo Q's 2nd son Saif al-Islam Gaddafi  is being held in zintan, last i heard.  he, like his father before him has an indictment poending at the ICC himself

he would LOVE to go get tried there, right now!  take me to theHague!  PLEASE!  but the libyans won't let him go;  they say:>  we'll take care of the trial, tyvm!

didya follow the "spies" that came to visit and got captured?  ICC Staff (International Criminal Court) in Libya Held For ...

When the delegation went to visit Saif, however ... When we searched the woman we found she had a letter ... Before the delegation entered the meeting with Saif, we ...
Australian lawyer for Gaddafi son held in Libya amid standoff ...
... visit by the Australian lawyer now caught in a dangerous standoff with local militia fighters over espionage ... think the woman will be with ... 1 Man charged with ...
melinda taylor:> saif's "angelic" visitor flip-flops everywhere!
goldfish1's picture

Archbishop Desmond Tutu has called for Tony Blair and George Bush to be hauled before the international criminal court in The Hague and delivered a damning critique of the physical and moral devastation caused by the Iraq war.

Cortez the Killer's picture

-1 for your stupid name

-2 for your poorly written, non sensical post

-3 to your parents and teachers for a shit job raising your sorry ass

slewie the pi-rat's picture

k-nuk is ok by slewie;  he may be related to rCrumb

his clients are happier than billGross's,  that for sure

it is the weekend, bro

he may be spending too much time with the wife again...  he'll be ok;  and i'm certain he already hates his parents and teachers...  he is pretty smart, ya know...

HoofHearted's picture

And I disrepectfully disagree with this know-nothing wanker.

Growing numbers of people in the world, China trying to suck up as much gold as they can, other CBs getting the feel for the same, yet the supply that is presently available should be enough???

Right. Nadler, is that you?

Monedas's picture

I disrespectfully disagree !

Mr. Fix's picture

I always liked your style.

Monedas's picture


Thanks .... although my style is a complete lack of style .... which is a style of it's own .... am I making sense ? Did you see that documentary   ?

IridiumRebel's picture

Yo fix! Good to see you here on a real site.



Mr. Fix's picture

Great to see you too!

I spend a lot of time at TF Metal Report now.

Beats MW.

Just click the link at the left.

Zero Govt's picture

How's Turd doing, has he not fallen on his sword and packed up yet?

Since his crap call at $36.00 Silver fell through the floor, then his happy smiley faces charts got heart-attack grimaces on them and now his reverse head and shoulders looks like the Hunchback of Notredamn with shoulder growth higher than the head....

...why hasn't the self-proclaiming "talent for reading charts" shorted his career in honourable fashion? 


AvoidingTaxation's picture

Stock is important... but:

You have to consider that a lot of people are not aware of this nuance

Headlines are important, real news not so much

The price is set on the margin.... so less supply = Fuck Benny

The shorts have to find new gold... mine supply is an important new supply

Bottom line: the flow is impacted, hopefully this is the straw on the TPTB back (probably not, but hey, if Walker Bush and a Kenyan can become presidents, everything is possible)




Silver bitchez, bullish!, hang the banksters, I had an incident with my boat.


Ghordius's picture

You might have a point with the news, but the stocks are what makes the difference between monetary metals and just valuable metals.

Monetary status requires *price stability*.

Money requires that you calculate *everything else* with it.

Ahmeexnal's picture

And me thought that "zee prize ztaveeleetee" only required some ugly obese sow wearing purple suits and cheap lipstick pretending to be in command of a sinking ship.

Ghordius's picture

You are perfectly right, we european should adopt the system of electing only leaders of impeccable beauty and full hair, full of telegenic charisma and popular appeal. Someone you would drink a beer with. In fact, we shold request some from the UK and the US. Please send us some that would never-ever admit to lying, if possible. Ask Oncle Rupert for confirmation, or this is all for naught.

Roandavid's picture

They should also be well hung, in order that the fucking be more profound.

knukles's picture

Hear tell Ghadafi's Ukranian he-she nurse is available

AvoidingTaxation's picture

You're right Ghordius, I was just making some points about Ruffian post.

In reality stock is what is important in the long term... but we have a massive manipulation in gold and silver. So this kind of bad news is just what JPMorgan & TPTB doesn't need... because this is bullish news.

Anyway. South Africa is a declining nation. They have a 50% chance to make big mistakes in the next year or two, like dividing black and whites or nationalising mines, or just continue with the black empowerment act and a socialist agenda (vs a meritocratic one).

If they don't make big mistakes they still will have a depletion problem + global markets competition as everyone else.

I have a lot of gold & silver mines in my portfolio, many from Africa, but none from SA. I especially like Ghana and Burkina Faso.

flaunt's picture

I understand what you're getting at, but I don't think stock to flow ratio is what really matters in this situation.  Price is set at the margin, so supply shocks can easily cause temporarily pricing anomalies.  What's significant about gold's very high stock-to-flow ratio is that the amount of new gold being produced each year does not significantly dilute the entire above ground supply which means increasing supply doesn't cause gold to become less valuable, which is part of what makes it a great store of value.  A sudden decrease in supply however means that there has to be a drop in demand of similar magnitude to avoid a price increase, or prices need to increase in order to mobilize more of the above-ground stock into the hands of buyers.


ruffian's picture

Ummm, do the math morons, there is 160,000 tonnes of gold above ground and 2500 tonnes in new mine supply each year and this strike accounts for less than 20 tonnes of annual supply.

Those dimwits here that dont get this are the ones that read only headlines and understand fuck all..............

Ahmeexnal's picture

Check your premises.  Those "160,000 tonnes of gold" you speak of....have long been gone.  All that's left of them are IOUs inside a cheap samsonite suitcase over at Ft. Knox and similar vaults.

knukles's picture

mimeographed IOU's

(betcha some youngns'll have to look that up...)

Dr. Sandi's picture

Somehow, the mention of a Samsonite suitcase in Ft. Knox brings up an image of a rather large gorilla in a nice suit and lovely tie.

He has managed to open the suitcase, only to discover that it IS full of tungsten.

Hilarity ensues.

Tinky's picture

I'm guessing that some of us dimwits believe that only a small fraction of the gold "above ground" is actually for sale, and that news of this nature is likely to have a psychological impact, not a meaningful impact on supply.

Dr. Sandi's picture

Between the kilotonnes of gold stashed inside ancient European dungeons and the massive amount lost in boating accidents by people right here on ZH, it's amazing that there's anything at all left to buy from the coin and bullion dealers.

flaunt's picture

I tried to be nice, but now I must disrepectfully insist you have no idea what the fuck you're talking about.

The large above-ground stock is reason to reject the oft-cited notion that gold can't go below cost to produce an ounce, because mobilization of the above ground supply could easily and instantly increase the available supply by orders of magnitude over what's produced by the miners.  Price isn't set by gold sitting still, which is what the vast majority of it is doing.  The price is set by gold that is moving, which constitutes mined supply and a small fraction of above ground holdings.  If the demand stays constant and the supply drops, prices have to go up to a level that mobilizes enough above-ground stock to rebalance the supply/demand equation.  In other words, there must be a dip in the stock-to-flow ratio in order for the markets to continue functioning.

francis_sawyer's picture

oh I get it... a FREE MARKET ECONOMY... gee ~ why didn't I think of that?

Fractal Parasite's picture

That's a logical comment, however..
The gold price is set not only by supply & demand and velocity, but also by fractional reserve futures, propaganda and other not-so-free market shenanigans.

For example, if the Gold price gets too high, the Powerz can always run a story about a 100 year old shipwreck that's just been discovered with hundreds of tons of gold bars that are about to flood the market.

Who remembers this from 2011?
200 tonnes of silver recovered from sunken ship

PS. while searching for the above story in the ZH archives, the response from the search engine was indicative of the discourse of this esteemed forum.

Enter your keywords: silver ship tonnes
Did you mean: silver shit tongue

Enter your keywords: silver shipwreck
Did you mean: silver trainwreck

CPL's picture

There is nothing to be done about it, not unlike like your pseudonym, run away fractal interest.


Like that insipid movie inception it does give an overview of how things get wrapped up from macro to micro in environmental definitions.  But fractional reserve banking doesn't operate that way.


We all know of the 1 dollar enters the bank and is loaned out 9 times.


This of course is insane enough to begin with that anyone with a buck may conjure 9 more dollars on top of that...with interest.  Let's not forget that interest riding at world wide at an average if adjusting all fungible pools of's around 0.0105%...then splash in ETN's, ETF's and a million option chains...with interest and service charges.


Now create an equities market and convince the first world that you can curb inflation by creating retirement containers, every first world dump has a scheme.  The only purpose to these containers is to curb inflation while increasing the credit supply.  So the middle class lock in their capital that can NEVER be touched until retirement with a penality (taxes at regular rate)...or before retirement with a penality (taxes at regular rate, but add the captial withdrawn to total salary that year).


With me so far?  Okay...this is where it get so fucking weird.


Now both the loaned money is then reloaned to other banks, at 1 dollar to 9 made situation and these are rolled up into very profitable credit generation devices.  See a bank doesn't WANT a profit, a bank operates on delivered credit, not capital.  Credit wants to be paid back over the term of forever and a day.  Capital requires immediate payment.


Since ther eis no real immediacy to paying anybody, anything ...that includes pensions now with the roll backs everywhere.  Ontario Teachers Union, the gold plate standard in all pension plans was completely destroyed yesterday night.  These are contributed funds over a century...coffers are empty.


Every pension fund on the planet follows it like a flock of birds.  Every.  Last.  One.


What was the fatal flaw?  Secondary pension schemes created by the governments and the banks themselves 25 years ago to completely undermine the public schemes.


Believe me when I say this.  We will be reading about senior military staff all over the world with the common theme of bouncing pension checks and even years long retroactive payments back into the system (because it's already happening) add insult to injury as they get older they will be unable to dump their existing properties to move to a more suitable area for medical treatment, health or whatever...because in a buyers uber market with nobody capable of obtaining the credit necessary to move the properties  further lock the pensions into a death spiral...we are just starting to see the snow ball rolling and people can just now hear it, soon they'll feel it.