An idiotic post, but it brings to mind an authentic risk to gold over the long term -- technology improvements that cheapen the cost of extracting gold from lower grade ores.
What would kill gold would be fiscal sanity from the U.S. government. Ain't gonna happen. I pity the short sellers.
You do realize that they are stripping, and then after digging that, they are digging, hauling, and processing 30 tons of ore now to get 1 oz of gold. Its very capital and energy intensive. Just a tire for a truck is $10,000 to $20,000 each, let alone buying a truck or feeding it fuel. Cash costs alone are now getting to $1000+ at many mines.
Im sure im not the only one who would like a source on this remark. Not doubting the number...just looking for some additional insight on the barbaric metals fundies.
Take a look at GSS most recent financials, for example. Their avg grade is probably 2 or 3 gr/ton, double what some newer mines will be. As time goes by, the higher grade mines are mined out and that leaves the lower grade deposits that had been previously passed by. And as the cost of energy rises, it takes the cost of both mining and building mines way up with it.
Fresh mail from a friend/pm who has been a gold bull for a decade...no shit. ----------------------------------------------------------------- From me - AAAAAA, do you have any insight to the actual cost to get one ounce of the barbaric metal out of the ground? I have heard the old number of $500.00. But thatâs seems low to me From him - BBBBB: Not a simple answer. It depends on the mine, new, old, country, labor component, etc. Bottom line: Every company has a different take. ----------------------------------------------------------------------- Thats why I prefer the tape to the balance sheets. At least when I look at the tape I know the real price....
The absolute BEST mines on the planet are $500. Goldcorp, for example in Red Lake Ont. Cash cost under $300, but add the cost for the mine and depletion, and overhead, and I bet you are around $500. BTW, don't believe the coproduct/byproduct mining costs, where they mine copper and get gold as a byproduct. If the world demand for copper drops and the price of copper drops below their cost, they won't be able to afford to dig and process, so won't produce any gold. Look for example at Novagold. They have a mine way north with 30 or 40 mm oz, but its only 1 or 2 gr per ton, and it will cost BILLIONS just to run the power line to the site. Honest to God. So, sure, there will be deposits found and mined, especially as paper money heads to zero and the price of gold rises to where it makes sense to put more money and effort into finding and extracting it, but don't expect it to be cheap or quick. The easy gold is either already mined or the mines are already producing. Future costs will go much higher as grades decline and costs to buy property, get past environmental roadblocks (7 to 10 yrs) and then build a mine and dig/process ore rise. In addition, taxes and royalties are going ballistic. All these things add up. Ok, its possible there will be some huge high grade deposit found with billions of ounces, perhaps under the seabed where nobody has drilled or mined before, but what will it take to find and recover it?
In reality, I think everyone is looking at gold from the wrong perspective, because its been that way all of our lives. I am actually just BEARISH on the value of global debt and confetti paper money. The supply of both are going up at parabolic rates. Short term, no, gold prices can easily be manipulated via leasing and futures, and until globally, overall, those with money distrust the paper promises enough that they decide to hold physical metal, the game will still work. Long term, yes, I expect to see $5000 gold within 5 to 10 years, because I think the paper money and debt Ponzi scheme will end in the distrust of all paper money and paper promises.