I'm not sure about the other metals, but gold is now priced about how much it costs to mine. >>
Yeah sure I believe that when its below $300, otherwise makes little to no sense. Before you post something like this I would cite sources and link real mining companies saying this cause otherwise yeah BS. The make money off of everything useful mined and it is not just gold coming out usually. Costs of mining is then there for split between profitabilty of all metals unearthed. If the above was the truth why the hell even waste your time. More FUD spread by hedge fund propaganda spreaders trying to keep the bull going.
I am not sure if your link is a reliable source, but it would be interesting to know if mining is still profitable for the mining companies.
When they mine, they unearth all kinds of resources like gold, silver, palladium, platinum, minerals, gems, etc. The mining is not done solely for gold, otherwise it would not be profitable.
Mining probably does cost $1200 in which they get not only an ounce of gold, but quantities of other stuff as well. So, gold could very well go lower with the mining companies still in the black because of the other products that they unearth still averages out a decent profit.
Is this clear??
"So many of our DREAMS at first seem impossible, then they seem improbable, and then, when we SUMMON THE WILL they soon become INEVITABLE "- Christopher Reeve
Mining companies made money when gold was $600 an ounce, I have no reason to believe they will lose money now. What needs to be considered is that marginal sites are no longer profitable. It is always the site on the margin the gets shut down. As gold drops in price, less area is profitable, but mining is what they do. It is all about the yield.
Retired United States Mint guy, now working on an Everyman Type Set.
Don't forget the difference in the cost to mine currently compared to the $600 an oz days. Heck, miners made money at $30 an oz.
But, the cost of energy, wages, regulations, to name a few, and the fact the easy stuff is gone make the cost of production go up. As DeepCoin said, they may have to cut back on the marginal areas and mine what they need to stay alive.
and to quote derryb
<< <i>The heart of this story is reduced supply hitting the market. >>
The problem is will this effect the vapor metals that are just on paper?
I'm curious if the management's bonuses are listed under "costs." If so, then yes, it may be too "costly" for mines to dig up gold. Until, of course, bonuses are adjusted I imagine it's still very profitable for miners to dig up PMs. It wasn't long ago that gold was under $1000, and mines were opening up like crazy. I know one must take inflationary rates into consideration (and they certainly would have raised costs), along with added regulation and labor costs (there must have been some reaction to all the mining accidents we've heard in the news in the last few years). Even with all this, I suspect mining costs would have risen 10-15%, at best.
That's a good article with lots of stuff worth talking about. Start with this:
Currently the difference between the two prices (futures vs. physical) is referred to as "premium" that you have to pay over "spot" (Gold futures price). But whatever the nomenclature, the fact remains that the paper Gold price no longer accurately reflects what you have to pay in the market to buy the metal. It’s becoming meaningless for people who want the real stuff. Hence, yours truly has created a reference database/datasource that will accurately track and record in real time the price of real physical Gold. The data is sourced from what the major Precious Metal dealers are charging buyers to deliver real physical Gold to their own possession.
The premium is for handling (making the attractive collectible designs, capital expenses and overhead on fabrication equipment, manufacture into convenient pieces, putting in packaging, storing, shipping, insuring, and otherwise dealing with actual pieces of metal) which take precious time and energy to do.
Or are actual people buying and selling actual pieces of gold expected to work for free, and price the artifacts at the same per-ounce price as a plain-jane "good for Comex delivery" 100+ oz. bar?
Should the 7-11 on the corner price a single cold can of Pepsi at the same per fl. oz. cost as the case price at Costco 15 miles away? or the distributor's syrup 150 miles away?
This is why the % premium on tiny bits of gold like one gram bars, 1/10 oz minicoins, and gold charms is so high relative a larger piece. Still needs to get handled.
Gold may be "money" (in the same sense as any other physical commodity like oil, corn, or cotton) but to more than 99.99% of people, and 99.9999% of transactions , gold will never be "currency" ever again, imo.
Scrap and large quantities of common ugly gold bars will trade near the paper price among the real handlers of the stuff who want to move many thousands and millions of dollars worth of the stuff,
and pretty, rare, and otherwise "artsy" or "personal utility" gold like jewelry and coins will continue to be priced at whatever the willing buyer and seller will exchange it for above spot, in forms such as small coins, bars, chains, watches, and other jewelry and be priced either by supply and demand for common stuff, or "special story" for rare or extremely beautiful creations. Many places in the other hemisphere, gold chain is sold by the inch at a price close to world spot or wholesale price?
"fabricated" vs scrap will also be priced at a premium because they require resource input to become usable industrial metal for electronics, etc.
The only thing to do once one "Takes Delivery" on Comex is either store the bars (tying up that money), or someday sell them to someone else (or otherwise give away, dispose, etc) and the demand for 100 oz bars is actually extremely limited to fabricators of small gold items and maybe a handful of billionaires.
How come no one with deep pockets takes down this "house of cards" by demanding delivery of huge amounts? because then they'd be stuck. Who wants to hold millions of ounces? (rhetorical question! everyone wants to hold millions of ounces. but no one REALLY does, get it?)
How come no one with deep pockets takes down this "house of cards" by demanding delivery of huge amounts? because then they'd be stuck. Who wants to hold millions of ounces? (rhetorical question! everyone wants to hold millions of ounces. but no one REALLY does, get it?)
By demanding delivery of huge amounts the system would get taken down and the gravy train ride for the connected players would end. They don't want that. They ran gold up to $1900 and are now running it down to under $1200, making money in both directions. The Chinese want/need 5,000 to 8,000 tonnes (or more) of gold to establish them as a serious contender to the US down the road. I suspect they are still several thousand tonnes short. They are probably one of the forces behind the current slaughter in gold prices so that they can continue to stock up. One account I read is that the system needs China and other "gold-poor" CB's to get up to where the larger G7 nations are (3,000+ tonnes) before the monetary system gets revamped. This policy would be "no big central bank left behind." So the chairs are being jockeyed around as the gold gets more evenly divided among the world's biggest players. China would be more than happy to take another 5,000 tonnes of gold tomorrow (160 MILL oz) if they could w/o upsetting the gold market or the other central banks. So China continues to suck up all the direct mine production they can in secret. They siphon off whatever other gold they can get from the Comex and LBMA. No doubt in my mind that China, US, Germany, India, and Russia for starters would love to have all those millions ounces of gold dropped by weak hands over the past 2 months. They just can't say that in public. GLD on its own has released about 450 tonnes of gold into the hands of various larger entities. Could be earmarked to go to Germany too to help settle their NY FED bank gold claims. All these guys desperately want the gold at these prices but will tell the public it's the last thing on their mind. Heck, if all had you to do was print up money to buy the other guy's gold, who wouldn't do that? The US has increased M0 $600 BILL since last October. That "little" bit of printing could buy close to 500 MILL ounces of gold (over 15,000 tonnes). If I had the printing press I'd be running it full steam to buy up all the cheap gold I could. A lot of bullion banks leased gold from the central banks over the past 10-15 years and technically need to repay it. The current low gold prices just may make this possible again. The last thing the big banks and gold players want is to "demand" delivery of huge amounts of gold and freeze up the system. They'd rather have the current games continue where they make money on both sides of the trade. They're greedy....but not stupid.
Who wanted all the gold that was freed up from Dec 1974 to August 1976 before gold went up 8X from $103 to $875? Someone wanted it...and got it.
<< <i>The premium is for handling (making the attractive collectible designs, capital expenses and overhead on fabrication equipment, manufacture into convenient pieces, putting in packaging, storing, shipping, insuring, and otherwise dealing with actual pieces of metal) which take precious time and energy to do.
Or are actual people buying and selling actual pieces of gold expected to work for free, and price the artifacts at the same per-ounce price as a plain-jane "good for Comex delivery" 100+ oz. bar? >>
In the late 70's, while in Italy buying gold jewelry, the jeweler would place the piece on a scale, pull out a calculator and price the item at spot price times actual weight. It was explained to me that there was an italian saying that translated into "the hands of the craftsman are free." Sure do miss that.
‘but gold is now priced about how much it costs to mine.’ And that’s precisely why gold price can’t stay at this low for long. Buy, buy, buy before it rallies once again
In 2001 gold was under $300 and mining companies were in business. When gold declines, they close the highest cost mines.
The cost of mining an ounce of gold does not establish a floor on the gold price any more than the cost to build a house established a floor on the prices of houses.
<< <i>In the late 70's, while in Italy buying gold jewelry, the jeweler would place the piece on a scale, pull out a calculator and price the item at spot price times actual weight. It was explained to me that there was an italian saying that translated into "the hands of the craftsman are free." Sure do miss that. >>
Ah, but was he charging you for .999 fine gold but selling you 14k or 18k gold???
<< <i>The cost of mining an ounce of gold does not establish a floor on the gold price any more than the cost to build a house established a floor on the prices of houses. >>
"We went back as far as 1997 and could not find one episode where gold producers as a group traded below book value - and the late '90s was known as the "nuclear winter" for the gold mining industry! Needless to say, we're in rare territory."
So "Cap Ex" means Capital Expenses or Capital Expenditures which means plant and equipment and exploration and upgrades which means Marginal Cost?
So the real cost to produce more gold is quite a bit less than the "fully burdened"cost which means it's cheaper to keep producing down to less than a thousand than shut down?
"The answer to the question is that there isn’t a business on the planet that can stay in business losing money for very long,” Morgan said."
Interesting but are they REALLY losing money or just not showing a profit? There is always a lot of hocus pocus when numbers start get thrown around.
I would say his statement would be true if they experience a negative cash flow that drains any and all reserves, including operating lines of credit. But, if they are just not showing a profit, then they join a huge clue of companies that show little or no profit year after year.
Chessman
Posts: 1,602 ✭✭✭
Comments
<< <i>Text
I'm not sure about the other metals, but gold is now priced about how much it costs to mine. >>
Yeah sure I believe that when its below $300, otherwise makes little to no sense. Before you post something like this I would cite sources and link real mining companies saying this cause otherwise yeah BS. The make money off of everything useful mined and it is not just gold coming out usually. Costs of mining is then there for split between profitabilty of all metals unearthed. If the above was the truth why the hell even waste your time. More FUD spread by hedge fund propaganda spreaders trying to keep the bull going.
type2,CCHunter.
When they mine, they unearth all kinds of resources like gold, silver, palladium, platinum, minerals, gems, etc. The mining is not done solely for gold, otherwise it would not be profitable.
Mining probably does cost $1200 in which they get not only an ounce of gold, but quantities of other stuff as well. So, gold could very well go lower with the mining companies still in the black because of the other products that they unearth still averages out a decent profit.
Is this clear??
BST: Tennessebanker, Downtown1974, LarkinCollector, nendee
Give Me Liberty or Give Me Debt
But, the cost of energy, wages, regulations, to name a few, and the fact the easy stuff is gone make the cost of production go up. As DeepCoin
said, they may have to cut back on the marginal areas and mine what they need to stay alive.
and to quote derryb
<< <i>The heart of this story is reduced supply hitting the market. >>
The problem is will this effect the vapor metals that are just on paper?
I imagine it's still very profitable for miners to dig up PMs. It wasn't long ago that gold was under $1000, and mines were opening up like crazy. I know one must take inflationary rates into consideration (and they certainly would have raised costs), along with added regulation and labor costs (there must have been some reaction to all the mining accidents we've heard in the news in the last few years). Even with all this, I suspect mining costs would have risen 10-15%, at best.
Interests:
Pre-Jump Grade Project
Toned Commemoratives
Liberty: Parent of Science & Industry
Give Me Liberty or Give Me Debt
Give Me Liberty or Give Me Debt
Currently the difference between the two prices (futures vs. physical) is referred to as "premium" that you have to pay over "spot" (Gold futures price). But whatever the nomenclature, the fact remains that the paper Gold price no longer accurately reflects what you have to pay in the market to buy the metal. It’s becoming meaningless for people who want the real stuff. Hence, yours truly has created a reference database/datasource that will accurately track and record in real time the price of real physical Gold. The data is sourced from what the major Precious Metal dealers are charging buyers to deliver real physical Gold to their own possession.
The premium is for handling (making the attractive collectible designs, capital expenses and overhead on fabrication equipment, manufacture into convenient pieces, putting in packaging, storing, shipping, insuring, and otherwise dealing with actual pieces of metal) which take precious time and energy to do.
Or are actual people buying and selling actual pieces of gold expected to work for free, and price the artifacts at the same per-ounce price as a plain-jane "good for Comex delivery" 100+ oz. bar?
Should the 7-11 on the corner price a single cold can of Pepsi at the same per fl. oz. cost as the case price at Costco 15 miles away? or the distributor's syrup 150 miles away?
This is why the % premium on tiny bits of gold like one gram bars, 1/10 oz minicoins, and gold charms is so high relative a larger piece. Still needs to get handled.
Gold may be "money" (in the same sense as any other physical commodity like oil, corn, or cotton) but to more than 99.99% of people, and 99.9999% of transactions , gold will never be "currency" ever again, imo.
Scrap and large quantities of common ugly gold bars will trade near the paper price among the real handlers of the stuff who want to move many thousands and millions of dollars worth of the stuff,
and pretty, rare, and otherwise "artsy" or "personal utility" gold like jewelry and coins will continue to be priced at whatever the willing buyer and seller will exchange it for above spot, in forms such as small coins, bars, chains, watches, and other jewelry and be priced either by supply and demand for common stuff, or "special story" for rare or extremely beautiful creations. Many places in the other hemisphere, gold chain is sold by the inch at a price close to world spot or wholesale price?
"fabricated" vs scrap will also be priced at a premium because they require resource input to become usable industrial metal for electronics, etc.
The only thing to do once one "Takes Delivery" on Comex is either store the bars (tying up that money), or someday sell them to someone else (or otherwise give away, dispose, etc) and the demand for 100 oz bars is actually extremely limited to fabricators of small gold items and maybe a handful of billionaires.
How come no one with deep pockets takes down this "house of cards" by demanding delivery of huge amounts? because then they'd be stuck. Who wants to hold millions of ounces? (rhetorical question! everyone wants to hold millions of ounces. but no one REALLY does, get it?)
Liberty: Parent of Science & Industry
By demanding delivery of huge amounts the system would get taken down and the gravy train ride for the connected players would end. They don't want that. They ran gold up
to $1900 and are now running it down to under $1200, making money in both directions. The Chinese want/need 5,000 to 8,000 tonnes (or more) of gold to establish them as a serious
contender to the US down the road. I suspect they are still several thousand tonnes short. They are probably one of the forces behind the current slaughter in gold prices so that they
can continue to stock up. One account I read is that the system needs China and other "gold-poor" CB's to get up to where the larger G7 nations are (3,000+ tonnes) before the monetary
system gets revamped. This policy would be "no big central bank left behind." So the chairs are being jockeyed around as the gold gets more evenly divided among the world's biggest
players. China would be more than happy to take another 5,000 tonnes of gold tomorrow (160 MILL oz) if they could w/o upsetting the gold market or the other central banks. So China
continues to suck up all the direct mine production they can in secret. They siphon off whatever other gold they can get from the Comex and LBMA. No doubt in my mind that China, US,
Germany, India, and Russia for starters would love to have all those millions ounces of gold dropped by weak hands over the past 2 months. They just can't say that in public. GLD on
its own has released about 450 tonnes of gold into the hands of various larger entities. Could be earmarked to go to Germany too to help settle their NY FED bank gold claims. All these
guys desperately want the gold at these prices but will tell the public it's the last thing on their mind. Heck, if all had you to do was print up money to buy the other guy's gold, who
wouldn't do that? The US has increased M0 $600 BILL since last October. That "little" bit of printing could buy close to 500 MILL ounces of gold (over 15,000 tonnes). If I had the printing
press I'd be running it full steam to buy up all the cheap gold I could. A lot of bullion banks leased gold from the central banks over the past 10-15 years and technically need to repay it.
The current low gold prices just may make this possible again. The last thing the big banks and gold players want is to "demand" delivery of huge amounts of gold and freeze up the
system. They'd rather have the current games continue where they make money on both sides of the trade. They're greedy....but not stupid.
Who wanted all the gold that was freed up from Dec 1974 to August 1976 before gold went up 8X from $103 to $875? Someone wanted it...and got it.
<< <i>The premium is for handling (making the attractive collectible designs, capital expenses and overhead on fabrication equipment, manufacture into convenient pieces, putting in packaging, storing, shipping, insuring, and otherwise dealing with actual pieces of metal) which take precious time and energy to do.
Or are actual people buying and selling actual pieces of gold expected to work for free, and price the artifacts at the same per-ounce price as a plain-jane "good for Comex delivery" 100+ oz. bar? >>
In the late 70's, while in Italy buying gold jewelry, the jeweler would place the piece on a scale, pull out a calculator and price the item at spot price times actual weight. It was explained to me that there was an italian saying that translated into "the hands of the craftsman are free." Sure do miss that.
Give Me Liberty or Give Me Debt
When gold declines, they close the highest cost mines.
The cost of mining an ounce of gold does not establish a floor on the gold
price any more than the cost to build a house established a floor on
the prices of houses.
<< <i>In the late 70's, while in Italy buying gold jewelry, the jeweler would place the piece on a scale, pull out a calculator and price the item at spot price times actual weight. It was explained to me that there was an italian saying that translated into "the hands of the craftsman are free." Sure do miss that. >>
Ah, but was he charging you for .999 fine gold but selling you 14k or 18k gold???
<< <i>The cost of mining an ounce of gold does not establish a floor on the gold price any more than the cost to build a house established a floor on the prices of houses. >>
Well stated....Cheers, RickO
"We went back as far as 1997 and could not find one episode where gold producers as a group traded below book value - and the late '90s was known as the "nuclear winter" for the gold mining industry!
Needless to say, we're in rare territory."
Give Me Liberty or Give Me Debt
Liberty: Parent of Science & Industry
<< <i>It's a cruel irony that those who are fully invested are now faced with the buying opportunity of a lifetime >>
Those who know how to recognize and take advantage of a buying opportunity also know how to be ready to take advantage of it.
Give Me Liberty or Give Me Debt
not as savvy nor nimble nor as successful as those dealing the stuff to us
Liberty: Parent of Science & Industry
Those who know how to recognize and take advantage of a buying opportunity also know how to be ready to take advantage of it.
***yeah but the rest of us chumps just buy and hold and watch the value fluctuate.
not as savvy nor nimble nor as successful as those dealing the stuff to us***
yeah, but if your plan is to dollar cost average, you already know in advance that there will be ups & downs.
that's not as good as being able to time every market turn, but it's not as bad as being bad at timing every market turn.
for those of us who understand portfolio rebalancing, it's the same thing.
I knew it would happen.
Cost to mine Gold $919.00
Looks like there are some fee's there that could be easily tightened up so perhaps the cost is even closer to the $610.00 price
So the real cost to produce more gold is quite a bit less than the "fully burdened"cost which means it's cheaper to keep producing down to less than a thousand than shut down?
Target $888
Liberty: Parent of Science & Industry
Give Me Liberty or Give Me Debt
"The answer to the question is that there isn’t a business on the planet that can stay in business losing money for very long,” Morgan said."
Interesting but are they REALLY losing money or just not showing a profit? There is always a lot of hocus pocus when numbers start get thrown around.
I would say his statement would be true if they experience a negative cash flow that drains any and all reserves, including operating lines of credit. But, if they are just not showing a profit, then they join a huge clue of companies that show little or no profit year after year.