Never Before Seen Charts: Gold Mining Industry’s Costs Are Higher Than Market Realizes

By The SRSrocco Report,

New information suggests that the cost to produce gold is much higher than what the market realizes.  As the cost to produce gold has skyrocketed over the past two decades, the mining industry has hidden certain costs by placing them in their capital expenditures.  This has lowered their "Cost of Sales" figures but has significantly increased their capital expenditures.

Furthermore, this massive cost shift has forced the gold mining industry to tackle these big problems, with big solutions.  However, these big solutions come at a big cost.  For example, as the average gold ore grade has fallen substantially over the past 20 years, the gold mining industry now has to move a great deal more ore to produce the same or even less gold.

In order to move a great deal more ore, the mining industry has to spend a lot more on trucks, tires, materials, energy, and labor.  In my newest video below, I show in detail the BIG CHANGES taking place in the top four gold miners in the world:

I believe several of the charts in this video has never been seen before by precious metals investors and alternative media community.  To understand why the cost to produce gold is higher than what the industry has led us to believe, we have to focus on the massive amount of capital invested by the gold mining industry.

Unfortunately, the investment of billions of additional dollars in capital expenditures by the top gold miners has not kept production from falling.  Actually, the top four gold mining companies' production peaked more than ten years ago and continued to trend lower.

One of the charts in the video shows the enormous increase in the amount of ore processed at Barrick's Nevada Gold Mining Operations.  In just 20 years, Barrick's Goldstrike and Cortez Mines now how to process four times, 24 million tons of ore, to produce the same amount of gold then they did in 1998:

To understand the tremendous increase in capital expenditures and costs to process four times more ore to produce the same amount of gold at Barrick's top mines, I highly recommend watching the video above.  Moreover, I provide additional cost analysis on the top four gold miners as a group.

The gold mining industry is plagued by rising costs in all areas.  While some of these costs have decreased over the past several years due to a  falling oil price, these costs will likely increase going forward as ore grades continue to decline.  Furthermore, as global oil production begins to experience "Seneca Cliff" like declines in the future, gold production will be negatively impacted, even with much higher gold prices.

Precious metals investors need to understand the changing "Energy Dynamic" and its impact on the entire economy and financial system.  While the gold and silver prices continue to trend lower, this should not be seen as a WEAKNESS, but rather as a STRENGTH.

Soon, the days of buying gold and silver at bargain basement prices will be gone forever.

NOTICE:  To be able to watch the newest video releases, please consider subscribing to my YouTube Channel HERE:  SRSrocco Report YouTube Channel.

Check back for new articles and updates at the SRSrocco Report

Comments

Consuelo Sat, 07/21/2018 - 12:07 Permalink

It doesn't matter anymore Steve - no one is interested...

And they won't be anytime soon either.

Nothing is going to happen in the gold space until real fear makes its entrance.   Not a blip, not a 3-week spike of $50 where the DP's (doom-porners) crawl out of the woodpile to proclaim again the proverbial moonshot.   No.  A real crisis of confidence that starts small, and spreads like a poison whisper, wherein the gut tells Joe Sixpack - 'this isn't happening'...

In the meantime, bait the hook with the EROI thing again - that should reel in a few.

 

 

GoFuqYourself King of Ruperts Land Sun, 07/22/2018 - 05:33 Permalink

There is a global financial reset coming, and soon. 70% of the time, financial resets/power shifts come with war. This time around remains to be seen. Because with a nuke- equipped planet, one time is the last time...

 

Central banks have acknowledged that PM's, and gold in particular, are the only asset without counterparty risk. It's at the top of their pyramid on their self published chart.

 

They have been misinforming the public and suppressing the prices for a long time. Meanwhile, smart sovereign countries and central banks are racing behind the scenes to grab all the gold and PM'S they can, while they can, before the reset.

 

How much metal you have at the reset will determine how much skin you have in the new game- whatever that medium of exchange/currency turns out to be....

 

 

In reply to by King of Ruperts Land

SRSrocco Consuelo Sat, 07/21/2018 - 12:54 Permalink

Consuelo,

As it pertains to gold and silver sentiment in the west, you are correct.  It is due to the fickle nature of the typical western investor.  However, the Chinese continue to purchase a lot of gold while the Indians are importing a great deal of silver.  Also, the Russian Central Bank continues to add a considerable amount of gold to their official reserves.

By you saying "No one cares anymore" is a PERFECT indicator of why 99% of investors are FICKLE by nature.

steve

In reply to by Consuelo

Yukon Cornholius Midas Sat, 07/21/2018 - 14:18 Permalink

Who (or what) actually owns all those PMs? Is it the billions of chinese and Indian people, or the central banks and large elite-power institutions? Nobody gives a shit about grandma's bracelets or Uncle Wang's coin collection. If the organizations that own the gold own the fiat currency printing presses, they own the power. 

In reply to by Midas

mikka Justin Case Sat, 07/21/2018 - 22:31 Permalink

" What percentage of Chinese or Indians have enough gold to live off of for 10 or more years?"

Good question. How many ounces would one need to survive, at the current prices, for a year? In parts of China or India (and probably some 80% of the world), I would estimate about 1 ounce every 2 months, and this is conservative. 60 ounces would easily last 10 years. Do you have 60 ounce in hand, this is the question?

 

In reply to by Justin Case

stacking12321 Yukon Cornholius Sun, 07/22/2018 - 03:32 Permalink

i've read it in many articles, and it's consistent with what i know of the chinese - they work hard, and they save a lot.

do a google search, china vs usa national savings rate.

the numbers in various sources will vary depending on methodology, this one shows 40% china vs 4% usa:

http://topforeignstocks.com/2014/10/10/a-review-of-personal-saving-rate…

this one shows 50% china vs 18% usa:

https://www.cnbc.com/2015/10/25/china-savings-rate-versus-the-world-in-…

In reply to by Yukon Cornholius

JerseyJoe Yukon Cornholius Sun, 07/22/2018 - 02:59 Permalink

The banks loan out the gold...and then run in other issues as their scam starts to break down.

Germans and Swiss have for years have trusted their banks...that will change quickly as more realize they are being scammed.

It has to be borne in mind that ever since the hard lessons the Germans endured before and after World War II, it became commonplace for German employees to elect to have money deducted from their wages every month to invest in physical gold accounts. This continues today. What had our attention was that it was a German bank that refused to deliver, and we view this as a big deal as it threatens to potentially destroy trust from millions of clients holding gold in German banks. We feel it is our duty to draw attention to this growing lack of trust in the banking system. 

Since drawing attention on KWN to this specific situation, we received many concerned phone calls where I advised people to do exactly what we suggested they do in our KWN interview, to test the water and to make a physical delivery request from their banks. As a result, we are now hearing of a slew of refusals to physically deliver anything of size.

A Swiss Foundation Cannot Get Their Gold Out Of Their Swiss Bank
So, we thought we would test the water. This week, a Swiss foundation sought delivery of their 420 kilos of gold (which is nearly 1/2 tonne of gold). They were refused. Seeking assistance, the bank was approached by a well-known vaulting partner with an offer to purchase the kilobars directly from the bank at a commercially acceptable premium to spot. This offer should have been immediately accepted as it would have been profitable for the bank. However, this offer was also refused, and the foundation was told to settle their gold account for cash.  Clearly the foundation’s gold was not held by the bank in allocated form.

Then we looked at the ‘standard’ Swiss allocated documentation provided to physical clients. To our astonishment these agreements no longer list any bar numbers, just a statement summarizing the number of kilobars held by the bank on behalf of the client. However, the storage costs are charged at the higher allocated rate

When questioned for bar numbers, the bank representative stated:

“Ich komme nicht drauf wie man einen Auszug einer einzelnen Position erhält. Genügt Ihnen der gesamte letztmonatigen Depotauszug (siehe Anhang)?”

Which translated says:

I cannot figure out how to get an excerpt from a single position. Are you satisfied with the entire last month’s deposit statement?”

Eric, we are talking about a Swiss bank not having the ability to track individual bar numbers (this is preposterous). This should have every Swiss gold depositor seeking physical delivery.

It is clear that Swiss/European allocated bullion holdings are at the very least pooled under the care of the bank.  Furthermore, it is now absolutely clear that no satisfactory audit procedures exist to ensure clients’ physical bars are segregated.  Cash settlement and refusals to deliver anything of size are now par for the course and raise a major red flag that client holdings are fractionally held

https://kingworldnews.com/andrew-maguire-audio-interview-now-released/

 

In reply to by Yukon Cornholius

Mementoil SRSrocco Sun, 07/22/2018 - 05:37 Permalink

Steve, a few days ago, gold has broken down from it's rising trend line which held since 2016.
I don't know how you feel about TA, but for me this means that gold is not in a bull market.
If costs were truly rising, and supply was growing scarce, I would expect those in the know to step in and buy the dip. But that simply didn't happen, which regretably forces me to re-evaluate my entire thesis regarding the PM.

In reply to by SRSrocco

DontWorry Consuelo Sun, 07/22/2018 - 21:57 Permalink

This is just the normal course of resource extraction.  Go for the highest value first. Then less, and less, and finally its mostly rock.  When people first explored Alaska there were gold rocks sitting in the streams.  They picked them up first.  Then started digging veins, then smaller and smaller deposits.  http://www.mineralexpert.org/images/article-photos/gold-rush-alaska/Lar…

 

In reply to by Consuelo

Dragon HAwk Sat, 07/21/2018 - 13:03 Permalink

I want to see what gold is worth when the People start burning Banks and confiscating the Gold they have hidden and try to spend to save their Necks, But hey I am an Optimist.

JerseyJoe Dragon HAwk Sun, 07/22/2018 - 03:17 Permalink

Much of it has been shipped to China already.  

https://www.bullionstar.com/blogs/ronan-manly/chinese-gold-market-still…

And the Russians know what is going so they have dumped all their USTs for month purchases of gold.

The scam is unravelling and the that process will accelerate.

This happen right before ABN AMRO and RABO Bank shuttered their gold banking and settled clients in fiat.

 

It is coming to Germany and Switzerland...real soon.  Once they find out the scam, there will be a run on the bank.

https://kingworldnews.com/andrew-maguire-audio-interview-now-released/

 

In reply to by Dragon HAwk

Ethelred the Unready Sat, 07/21/2018 - 13:11 Permalink

You expect individual mines to give out after a period.  The whole industry presumably continues to develop richer properties.

Much like say the oil industry.  As one well dries up, others are being drilled.   

Xamune Ethelred the Unready Sat, 07/21/2018 - 14:52 Permalink

You expect individual mines to give out after a period.  The whole industry presumably continues to develop richer properties.

"Richer properties"??? Where???

I mean yeah you may have a property that contains more gold overall than the last property mined out.. but lower grades do not make it a "richer property", it makes it MORE EXPENSIVE to produce the gold. Richer for whom???

Do you own gold mining stock? I do.. and yes, I read the numbers and the reports.. and I am seeing it exactly as this writer calls it!

In reply to by Ethelred the Unready

GoFuqYourself Xamune Sun, 07/22/2018 - 04:37 Permalink

Unless they have secretly discovered a cheap way to synchronize/produce PM'S, the game is up soon.

All the low hanging fruit (high grade and even medium grade ore) has already been plucked.

It also takes years to bring on new mines, after their discovery- and at these prices, low grade mines are not being brought online so much.

So YEAH, it looks like supply and demand is about to have a say in matters.

In reply to by Xamune

snblitz Sat, 07/21/2018 - 14:53 Permalink

When governments are giving away money for free (low interest) why wouldn't you spend it on capex?

And all the endless money printing leads to a devaluation of the currency, so the currency denominated "price" of capex goes up.

The gold you are digging up hedges you against the currency devaluation and you get to pay back with cheaper currency.

It all seems quite sensible in a perverted sort of way.

Balance-Sheet snblitz Sat, 07/21/2018 - 19:00 Permalink

Looked at it the way you do, sure, but think about grinding 1000 kilos of rock to dust then soaking it in huge tanks to come away with 2 grams of Gold or less. 1,000,000 grams of rock = 2 grams AU.

Even your heartiest marine mammals are going to turn grey with this sort of effort so it is an ore grade problem. Even at minus 2% real interest you still have to have some cash flow.

In reply to by snblitz

PigMan Sat, 07/21/2018 - 15:40 Permalink

We all remember Peak Oil. What happened? Prices went up, and they put a hell of a lot more money into finding new reserves, that we all believed didn't exist, and developed better technology to get it out of the ground.

 

If prices go high enough we'll find a way to make off-shore deep water mining a reality. Not just shallow dredging.  

 

I agree that the cheap easy unrestricted mines are being depleted, and the cost of production has gone way up, but there is more gold under the oceans than on land. We just need to figure out how to get it.

 

If prices go high enough, the solutions will come.

 

Peak Easy, yes. Peak Gold, no.

 

 

SubjectivObject Sat, 07/21/2018 - 17:19 Permalink

one way or another

kill the miners

then ((friends)) with a ((free source of funds))

can take them over

cheap

after that, the price can be allowed to rise

and the taxes on windfall capital gains

then when prices are real high

hate the hoarders!!

so confiscate it

silverer Sat, 07/21/2018 - 18:02 Permalink

This is almost silly, because the use of the word "market" implies there is one. The one that exists is a crony market. Or a manipulated market. Or fixed. Or rigged. Or whatever suits your taste. But certainly not a free and open market, with 100% information available to all participants.

Enrabard Sat, 07/21/2018 - 18:48 Permalink

Oh really?

He even don't read these charts properly... between 2000-2017 they produce more gold not less, yield every year is now lowwer but similar y2y, no big difference there in last years, if it would be to small they wouldn't be doing it at all...

Maybe they find less gold where they look for - but it only means they exploit wrong places or old spots. There are still lots of places with gold in the world - the same as with any other natural resource. There's plenty in Philippines but because of environmental reasons it's hard to dig for it and keep environment natural, unharmed or not risk biiiiig fines. 

"(...) What does it mean for the investors? Don’t listen to the so-called experts who have been calling “gold shortage” for years. Given the enormous gold holdings in the world, it’s actually hard to imagine a lasting shortage of the yellow metal. Indeed, gold usually remains in contango, not in backwardation, which implies that there is no supply shortage. Thus, forget this idea. Taking decisions based on false premises is the shortest way to suffer losses "

There is plenty of gold in the world. Only the easy gold to get is ending. If price goes up there will be a lot of junk gold to be reclaimed from people without any mining at all and lots of new mining operations will start also.

The only shortage can come from silver, not gold.

And if they produce less and less gold needing more and more debt? It means they should go banrupt, becuase their business model is flawed and they mine it in the wrong mostly old or weak places! ROTFL

 

When price goes up so much like in the last bubble lots of companies worldwide will find much more gold than you can imagine... It's not bitcoin mining, it is everywhere randomly.

There is no peak gold, the same as no oil peak or gas peak. They are just a very conservative field without much innovation and wide look for the big new gold mines.

And look at gold charts - it's so weak! It can fall so much lowwer still.

 

 

 

 

implicitsimplicit Sat, 07/21/2018 - 18:50 Permalink

Only the imploding of neutron stars has the necessary heat/pressure/energy for gold production. The metal looks the same from the beginning of earth till now, it doesn't degrade; it is the most unique of all the metals on the periodic table in its origin and beauty. Only a limited amount of the non oxidizing metal bombarded to earth after the implosion and collision of binary neutron stars. 

exartizo Sat, 07/21/2018 - 19:36 Permalink

IF gold mining costs were putting extraordinary pressure on mining companies profits they would simply go out of business... there is no sign of that from the miners.

Also, if the miners were REALLY PISSED?

They'd DO SOMETHING SERIOUS ABOUT the continuous suppression of the price of gold by the Banksters who control the price of gold with paper.

But NO.

No complaining, no lawsuits, no screams of financial pain from the miners.

Why?

Because the Banksters keep the price high enough to keep the miners relatively happy, for now. Or the Banksters pay off the miners under the table.

This article is ummmm... BULLSHIT and SRS Rocco is a Fucking Slimy Gold Pumper disguised as someone disseminating useful information.