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Peak Gold
From GoldCore,
Today's AM fix was USD 1579.00, EUR 1294.05 and GBP 1022.34 per ounce.
Yesterday’s AM fix was USD 1565.50, EUR 1281.10 and GBP 1011.96 per ounce.
Gold fell by 0.3% in New York yesterday and closed down $4.90 to $1,571.70/oz. After a sharp drop and equally sharp bounce higher, silver rose 0.3% or 8 cents to close at $27.17/oz
South African Gold Production Continues To Plummet
After initial falls in Asia, gold traded sideways and then gradually ticked higher later in the Asian session and has seen further gains in European trading. Gold is currently set to finish the week marginally lower in dollar and sterling terms but higher in euro and Swiss franc terms.
South Africa's gold output continues to collapse and fell a further 2.9% in May, according to data from Statistics South Africa released yesterday. The decline in gold production comes despite a 0.8% rise in total mining output in the same month (see below).
Gold is being supported by euro zone currency and contagion risk and inflation hedging diversification.
Merrill Lynch predicted gold would reach $2,000/oz yesterday due to more astute investors fearing inflation due to ultra loose monetary policies. Francisco Blanch, Head of Global Commodity & Multi-Asset Strategy Research Merrill Lynch, said in a CNBC interview that Merrill believe “that $2,000 an ounce is sort of the right number. We believe that ultimately the Fed will be forced to do quantitative easing.”
“If it happens in September, as our economists expect, we will get a rally sooner in gold,” Blanch added. ”If it happens after the election (in November), we will get the rally a little bit later; probably we will touch $2000 an ounce sometime next year.”
Demand and supply factors remain in gold’s favour.
There is strong demand from store of wealth buyers in Europe, China, the Middle East and the rest of Asia – not to mention strong demand from institutions and central banks.
A new trend seen in recent weeks is that of an increase in demand for corporates in the euro zone who are diversifying deposits in order to reduce bank, currency and systemic risk.
While some attention has been paid to the robust, broad based global demand for gold, less attention has been paid to the supply side and in particular the important gold production data.
Supply remains anaemic with the cash for gold craze seeming to have run its course, with central banks now net buyers and with mine supply not increasing sufficiently to meet demand.
With regard to global gold production, China, the world’s largest gold producer and now the world’s largest gold buyer, has been the only major producer to see an increase in production in recent years.
The massive increase in Chinese mining supply has raised some eyebrows with some questioning whether the figures are being exaggerated by Chinese mining companies and Chinese bureaucrats.
More recently, there is a concern that gold production in China may actually be declining as older mines reduce production.
South Africa produced over 1,000 tonnes of gold in 1970 but production has fallen to below 250 tonnes in recent years (see chart above). This is a collapse as these are levels last seen in 1922 and happened despite the massive technological advances of recent years and more intensive mining practices.
South Africa's gold output fell further 2.9% in May, according to data from Statistics South Africa released Thursday, despite a 0.8% rise in total mining output in the same month.
Recently, the decline in South African gold production has been attributed to national electrical issues and power outages, operational delays and safety issues. However, the scale of decline at a time when there has not been a corresponding decline in base metals mined in South Africa suggests that geological constraints may be leading to lower production.
Other large gold producing nations have seen similar sharp declines.
Peak oil is a phenomenon many will be aware of – peak gold remains a foreign concept to most.
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.
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 2001, the world saw what was believed to be record global gold production of 2,649 tonnes. Production then fell in the coming years despite the rising gold price.
In 2010, despite a 5 fold increase in the prices in US dollar terms, some estimates recorded gold production had risen 1.5% from the record in 2001 at 2,649 tonnes to a new record of 2,689 tonnes.
World Gold Council data for 2011 showed that production had increased by 4% from 2010 to 2,810 tonnes of gold. Much of the production increase was attributed to Chinese production data.
The Chinese production data may or may not be reliable but there is also confusion with regard to the data as there are discrepancies in the gold production data between the US Geological Survey and the World Gold Council.
The USGS has informed us that the discrepancies are due to different estimates of artismal mining data and that the USGS reports each country's reported data.
Paul Tudor Jones’ Tudor Group released a chart using GFMS data in 2010 that showed that global gold production had peaked in 2001 and was falling (see chart above and video).
In 2009, Barrick CEO Aaron Regent claimed that global production had peaked in 2000.
He told The Daily Telegraph 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 production increases.
Peak gold has yet to be considered and analysed by the international financial community but there is a risk that it has happened or will happen soon with a consequent impact on the gold mining industry and on gold prices in the 21st Century.
The fact that peak gold may take place at a time when the world is engaged in peak fiat paper and electronic money creation bodes very well for gold’s long term outlook.
NEWSWIRE
(Bloomberg) -- South African Gold Output Fell 2.9% in May From Year Ago
South African gold production fell 2.9 percent in May from a year earlier, Juan-Pierre Terblanche, a spokesman for Statistics South Africa, said by phone from Pretoria today.
(Bloomberg) -- South African Mine Output Rose 0.8% in May From Year Ago
South African mining production rose 0.8 percent in May from a year earlier, Juan-Pierre Terblanche, a spokesman for Statistics South Africa, said by phone from Pretoria today.
(Bloomberg) -- South African Platinum-Group Metal Output Declined 6% in May
South African platinum-group metal production fell 6 percent in May from a year earlier, Juan- Pierre Terblanche, a spokesman for Statistics South Africa, said by phone from Pretoria today.
For breaking news and commentary on financial markets and gold, follow us on Twitter.
NEWS
Gold headed for 2nd losing week as dollar firms - Reuters
Gold up for first time in four sessions - MarketWatch
Italy Exits Before Greece In BofA Game Theory - BLoomberg
Oil jumps on Iran; corn up on renewed harvest worry - Reuters
COMMENTARY
Jim Grant Discusses The Fed's 'Backward Shooting Gun - Zero Hedge
LIBOR scandal brings gold price manipulation once more to the fore - Mineweb
In Gold We Trust 2012 - Acting Man
Libor and other manipulations are not victimless crimes - Max Keiser
Jim Rogers: Duck and Cover, Your Cash Is NOT Safe; Buy Physical Gold & Silver - ETF Daily News
Why Silver Price Could Double in Three Months - Resource Investor
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I'm not touchy - I just hate opinionated douche-bags with nothing to contribute but their snide comments...
Wah wah wah, little girl. I just make you SOOO MAD!
Heh. Incidentally, you DID ask for comments.
Yeah, thanks. Were you one of my up arrows ?:O)
Naw, but I did appreciate the post and your insights.
Perhaps he wasn't looking for comments from a total dick-head
You're still butthurt about the other day, huh?
Would you stop snivelling if I apologize?
Thanks for sharing your experience MDB.
In the states we also have venture capitalists aggressively pulling gold from the public with Cash4Gold stores. Mining gold from the cash strapped masses has been very profitable for these vulture firms.
Yeah, we have the same here and it stinks. We all have to make a margin but those guys are just ripping people off.
What I was trying to do was to bring a little reality into the debate. We can speculate 'til the cows come home on paper versus physical, mined versus scrap, CB sales/purchases but most of it is based on heresay or MSM bullshit. I thought some data from the coalface might be appreciated.
I'm at an auction next Tuesday and will report back. I'm betting it will be well overbid and the people doing the buying are not idiots.There is a genuine shortage of physical and its here and now, not some time in the future. If you don't already have a stack there might not be a lot of time left to get one.
All IMHO, naturally.
Thanks for the insight...interesting.
http://www.creativitypool.com/viewtopic.php?t=2853
what about PEAK BS? hopefully 0hedge doesn't lose its creditability by running stories like this
Until I started reading of the price manipulation of prime metals on ZH I hadn't realised the significance of the fact that the price of gold is known as 'The Morning Fix'.
Good news on that front; after at least one abortive effort, the Chinese are setting up their own physical-only PM exchange which will also "fix" twice a day.
The London Gold Pool lives on via the LBMA and their cronies at the CrimEx but, finally, someone is stepping up to the plate - someone who has sufficient fire-power to blow those pin-stripe cock-suckers to hell.
Bring it on!
Mine supply has a marginal effect (at best) on the price of gold..........huh?
Virtually all the gold ever mined still exists. It's above ground supply is massive. Mining adds only 3% to global supply which never diminishes.
No such thing as peak gold from a traditional perspective.
"Virtually all the gold ever mined still exists. It's above ground supply is massive."
http://en.wikipedia.org/wiki/Gold
"A total of 165,000 tonnes of gold have been mined in human history, as of 2009.[2] This is roughly equivalent to 5.3 billion troy ounces or, in terms of volume, about 8500 m3, or a cube 20.4 m on a side. The world consumption of new gold produced is about 50% in jewelry, 40% in investments, and 10% in industry.[3]"
How does that compare to, say, MBS or CDS? Gold is a tiny market but receives a lot of attention from CBs, MSM bullshitters (including professional POS's like Buffet & Munger) and people long on mouth but short on facts.
Personally I'd be happy to own 3% of global supply.
So all the gold above the ground is worth roughly 8 trillion dollars...
Now 60 mmbpd x 365 x 100 per barrel = 2.2 trillion (thats only the oil trade trades and is priced freely, i.e. not sold at a loss locally, e.g. SA, VZ etc...)
Ever wonder why the oil-gold ratio has been remarkably stable for so many years?
Could that be because gold is money - real money, as understood by the people who own most of the in-ground oil?
According to Stichen, the gold has been taken off planet by the Annunaki, so all of the gold mined is not still available for trading.
It's mostly papar and it's a bubble.
meh, just a useless relic to be sewn in side the clothes of scared people
Oh, like the Jon Nadler who fled Romania in the 1960s with gold coins sewn into his clothes? The same execrable, disingenuous and vile former Communist refugee Jon Nadler who nevertheless incessantly bashes gold and his self-styled "Radical Goldbug Extremists" in his daily screeds on Kitco.com?
I suspect that it is not a coincidence that Jon Nadler was born in Transylvania.
I guess I forgot the <sarc off
But, isn't that what Bernanke and that old guy, of which I can't recall his name at the moment, tell us about gold?
I think you mean Charlie Munger, Warren Buffet's little bitch...?
Also known as Charlie Munger, Warren Buffet's diapered playpen pal.
Sea floor mining is just getting started. No peak yet.
The Myth of the Gold Supply Deficit: http://www.lewrockwell.com/blumen/blumen14.html
Also explained in the Erste Group Gold Report posted two days ago here on ZH.
The Myth of the Gold Supply Deficit: http://www.lewrockwell.com/blumen/blumen14.html
"There is no gold supply deficit. Even if there were, to cite Dick Cheney, "deficits don't matter". The dollar price of gold is formed through the balancing of total gold supply and demand against total dollar supply and demand. The incremental supply and demand during any one-year period is irrelevant to the price. The illusion of a deficit comes about from an incorrect interpretation of supply and demand figures: annual amounts rather than totals are compared."
Well, excuse me but...last time I looked there were a fuck of a lot more US$ in existence than a few years back, yet the price of gold has hardly changed.
How's that work, then?
That is precisely the point.
The annual mining supply has little to do with the price of gold. Rather it is the perception of gold owners and their willingness to part with gold at a certain price that determines gold prices in the market.
Perception of gold as real money in the face of fiat-printing may increase the price if/when buyers lose faith in fiat.
See pages 23-27: http://www.zerohedge.com/news/gold-report-2012-erstes-comprehensive-summ...
Perception of gold as real money in the face of fiat-printing may increase the price if/when buyers lose faith in fiat.
May increase the price? What alternative are you imagining - seashells?
Clean water, good land for farming. Gold is money but money buys needed things. Clean water and ample food are needed things.
People are holding gold to sell it later for a new fiat, people need current fiat to buy gold and to buy other goods. Some are leaving nations for new nations. They prefer no one know that gold is with them, hence all the boating accidents.
Is there enough room in Buffet's bathtub for both him and Munger to play with his rubber duckie?
Equity rally can resume as overbought USDX daily & weekly chart commences overdue retracement while EURUSD selling ceases for now. This results in SPX / DOW choppy weekly charts reverting to neutral.
This remains a constant and will not change:
* USDX monthly indicators [ie big picture] continue to warn of significant long term USD upside. (thus EURUSD & AUDUSD etc bearish)
* SPX monthly indicators [ie big picture] continue to warn of significant long term downside for equities which will be worse than 2008.
http://www.zerohedge.com/news/2012-12-24/market-analysis