Gold Can’t Beat Checking Accounts 30 Years After Peak

[tmarket]

Quote from thriftybob:

The cost to find, permit, develop and mine an additional ounce of gold these days is well over $1000 and takes about 10 years, and every year it gets harder to do. Cash cost numbers mean nothing when it takes $2 billion and 2 or 3 years, just to put in the power line to the mine, and the projects capital cost is $5 billion, and thats for a mine that can only operate 5 months a year, where everything will need to be flown in by chopper.

Real gold, already mined, doesn't have any of those problems.

Unfortunately, misinformation abound.

The cost per oz for the the majors is around $400 in recent years, up from about $250 just a few years ago. The primary reason being the use of lower grade ores in order to conserve the higher grade ores. This is an artificial constraint on supply, perhaps demanded by their hedge fund owners who are increasingly demanding a reduction in gold production.

 

[AMT4SWA]

The sad part of the current reality is, bullets I bought almost 5 years ago (when I started to buy GOLD for a longer term trade) have gone up in value more than GOLD the past 5 years.......LOL!!! :eek:

 

[thriftybob]

Quote from tmarket:

Unfortunately, misinformation abound.

The cost per oz for the the majors is around $400 in recent years, up from about $250 just a few years ago. The primary reason being the use of lower grade ores in order to conserve the higher grade ores. This is an artificial constraint on supply, perhaps demanded by their hedge fund owners who are increasingly demanding a reduction in gold production.

You are looking at cash costs. That doesn't include the cost of the search, property, exploration, equipment, mill, (those are lumped into depreciation and depletion) or and overhead like g & a or interest expense. If costs were really $400, miners wouldn't be making pennies a share.

And what is this "conserving higher grade ore" crap? They design a pit on the basis of a model which takes into account the grades and where they are located, and the average price they expect to sell the gold for. The program analyzes what waste would need to be removed to get at the various pockets of ore and therefor what pockets are worth going for. They then dig the pit from top to bottom, lol, because they need to do it in that sequence in an open pit mine, and what ore comes out gets processed. I will admit they tend to open lower grade pits when prices are high, but did you ever consider they might do that because they had been waiting till the price justified to mine that it, and they might blend the ore with higher grade from other areas for processing in order to maximize output and utilization, and minimize cash cost in long term? Would you rather they just write off the low grade pits? Or wait till the ore just "disappears"? That's what happens in 3rd world, especially.

And hedge funds have nothing whatsoever to do with any of this, at least in the miners I've invested in.

I suggest you have long chats with VP of Ops from the miners you own so you get a clue before typing.

Ps: Ex CFO and costs guy here. Most of my fortune was made in gold mining stocks

 

[PlusMinus]

Quote from tmarket:

Unfortunately, misinformation abound.

The cost per oz for the the majors is around $400 in recent years, up from about $250 just a few years ago. The primary reason being the use of lower grade ores in order to conserve the higher grade ores. This is an artificial constraint on supply, perhaps demanded by their hedge fund owners who are increasingly demanding a reduction in gold production.

WTH? Hedge fund owners? What are you talking about? You're suggesting that hedge funds that own large shares of these miners are conspiring and influencing them to chose one particular path to production over another in order to deflate the supply?