Here are some big gold mining companies data: http://www.visualcapitalist.com/what-is-the-cost-of-mining-gold/ They try to claim that the cost is around 1100. Do you guys believe? In gold history, the gold price stays at round 400 for years around 1994 before years of raise. http://goldprice.org/gold-price-history.html Global inflation is a round 4% per year http://www.statista.com/statistics/256598/global-inflation-rate-compared-to-previous-year/ 400*(1.04)^20 = 876. The true cost may be around 900, what do you guys think?
Do I believe it? No. Oil producers inflate stated production costs too. Perhaps to scare competition out of the market? Gold production costs are tied to energy costs, like many other things (agriculture/commodities etc).
Once you dig through the accounting gimmicks of the majors I would guess that before the oil price decline the number was more like $1100... these companies have every incentive to revise the cost per ounce lower to make themselves appear to have more profit potential for investors.
My gold mining buddy spends a lot of time talking about the price of diesel. I'm guessing that's his major variable expense.
There is no "price" to mine gold. There are mines that are profitable at anything above $800, some profitable above $1100, and some profitable above $1500. Its an upwardly sloping supply curve, just like most commodities. If you try to simplify it to a single price you're missing the entire dynamic of that market, and most others.
Sig is right. And besides that, the amount of gold already owned (and used as a store of value) is so large compared to the amount dug up per year that changes to the profitability of mining operations has no immediate effect on the price of gold, at least so far. If someone figures out how to make huge amounts of gold out of seawater at a cost of $10 per ounce, yeah that would have an effect. But mines are very limited sources of supply.