Unity Mining Limited Quarterly production (December 2013 quarter) of 7227 oz gold at a cash cost of $1498/oz http://www.unitymining.com.au/wp-co...SX-Release-December-2013-Quarterly-Report.pdf
What relevance does mining have in the gold price trend? The mining is the same as a decade ago, yet the price trend was as stable as a rollercoaster. It's obviously existing stocks driving the price trend, not mining.
02 Jan 2015 Goldman Sachs has now set its long-term forecast for the price of the yellow metal at $US1,200 an ounce for the next three years. (1200$ USD) the break-even price for the majority of gold miners once all costs such as exploration, management and mine repairs are included. Gold may well fall below $US1,200 in the year ahead, but lower prices would force loss-making miners out of business and reduce supply, helping prices to recover eventually. Mark Bristow, chief executive of FTSE 100 miner Randgold Resources, has said: "The [gold-mining] industry is clearly stuffed at $US1,140 and it will be a bloodbath at $US1,000." http://www.smh.com.au/business/mini...e-as-the-best-safe-haven-20150102-12gqw1.html http://www.smh.com.au/business/mini...e-as-the-best-safe-haven-20150102-12gqw1.html
As I said in my previous post here, the amount mined gold was a nearly constant over the decade while the price doubled tripled quadrupled and why would the opposite direction be different? IF there would be a bloodbad somewhere, it will be in the recycling. Year / Mining / Recycling (tonnes) 1997 2527 631 1998 2574 1108 1999 2602 620 2000 2618 619 2001 2645 749 2002 2618 872 2003 2621 985 2004 2493 878 2005 2548 897 2006 2486 1126 2007 2476 956 2008 2409 1217 2009 2584 1672 2010 2659 1653 2011 2839 1611.9 2012 2864.1 1590.8 2013 3018.6 1371.4 And as one can see, there is already blood, 4 years 1600+ tonnes and in 2013 back to 1370. All that happened was extra recycling and that extra is now going again just like it came. There was new blood, and it's now dripping away to bring back the "normal". And I'm sure central banks will happily replace what was extra recycled and is now not more.
To give an update on this, since in meantime I located recycled gold data on a primary source site: 2013's silver/gold production ratio was 7.166. So a 7:1 with "production" defined as mining+scrap/recycling.
They couldn't even get their end of year prediction correct, now they are throwing up 3 year forecasts. Hilarious :lol:
What is funny is that respected traders are now jumping on board with the gold bear market. Rick Ackerman today predicts a future gold price of wait for it ........ .... $810/ oz down $380 - purely technical ??? http://www.kereport.com/2015/01/02/friday-morning-rick/
Actually most hedge funds are long, they are completely ignoring the big banks forecasts on gold... http://www.bloomberg.com/news/2014-...ld-bets-defy-goldman-outlook-commodities.html
Accepting that a 7:1 ratio correct, is gold ten time overvalued or silver ten times undervalued? Or are we comparing apples with oranges where the variables make it impossible to compare? That said, as they all have a dollar value as a point of reference, I strongly believe silver to be undervalued, and as such, it is a worthwhile metal to stack, more so than gold.
Ahhhhhh ha ha, heehee, eh heh, woo hoooooo ....... what a crack up, that old chestnut again ! Hey Sammy, ..... having a moment of clarity, yeah ?
7:1 ratio? Gold is good for bad times, silver is good for good times as it's mainly an industrial metal rathe than a store of value. With Europe and China slowing I am fearful for silver. With bad times ahead I am confident about gold.
Gonna illustrate the story along a margin value. Imagine a product X, whose year production and consumption quantities are both 100 units, price 10 each. Imagine consumption drops to 80 units, BUT Mister Bank buys the surplus of 20 units, so that the price remains 10 each. He does this for 5 years in a row, and has then built up a stock of 100 units. Now, imagine that production cost doubles due to whatever (resources depletion / processing costs / machinery damage / whatever) but customers cannot or just don't want to pay more than 15. The company that produces X thus loses and decides to suspend production until the problems / reasons eventually get solved). And then Mister Bank re-enters the picture, that has built a stock of 100 units over the 5 years. Mister Bank can thus supply the customers for an entire year, and decides the price of 15 that customers are still willing to pay. So, the price of product X has increased to 15 for a year long, until the company eventually coped with the problem and is able again to produce it for 15 or even back to 10. How does this explain the gold / silver price difference? Well, the amounts stockpiled is just different than the production cost difference. That's all. The bigger the stockpile, the longer the company is unneeded to make the product available to the customers. The smaller it is, the more the customers rely on the company. The bigger the stockpile of a product, the less the customers are dependent on the company / on the production cost. In the gold versus silver case, the stockpile ratio differs alot from the price ratio. Golds price is much less dependent on production cost than silvers price. Being one of the reasons I opted for silver rather than gold, since a higher reliance on a production cost means a closer tracking of general prices, being the hedge against inflation goal. Of course, there are more elements in the picture. It's also important who is stockpiling and for which reason. Golds market has a much higher degree (figures suggest an overall double) of general-prices-increasings/inflation - causing lazybutts, while silvers market is more small fish that produce. On the other hand, those small fish tend to be less experienced / newbie and less informed / aware, so more prone to error, which in turn draws in lazybutts that wanna take advantage of this. That's why there is a (serious?) degree of prices ratio based swapping by the lazybutts. They milk silvers market to buy more gold, the metal that is also given advantages relative to silver (different tax treatments). Of course, with a worldwide cooperating central planning selling its stockpile low to bullion banks / institutionals and buying it high back from them, the small fish gold guys end up being milked too along less ounces due to higher price then less fiat due to lower price.
I can't believe it... 1 day later Ackerman now changes his story to predict a gold price as low as $810/oz to $2300/oz. I must revise my comments I think he will be right http://www.kereport.com/wp-content/uploads/0103-1-1.mp3
I was commenting on an earlier post of Pirocco where he quoted 7:1. That said, my question is less to do with the GSR but more the nexus between the two. Historically they were joined as currency, compare the silver in one crown to the gold in one sovereign and we get the 16:1 ratio. This joining at the hip was mandated and four crowns always equalled one sovereign. My question is now that yes there is a GSR of 76, because we compare the dollar price of gold to that of silver, other than that any two items can be compared as a ratio, what is the link between the two precious metals, other than historical? Yes they are both precious metals, both a store of value, both used as jewellery, but they fill different needs and futures. My analysis to date indicates that silver in the next couple of years will quadruple in price whereas gold will possibly double. But the reality is, we are tracking two individual commodities.
What you name here as "nexus", is not a reason / a cause, it's the result of an interaction of an amount elements that are reasons / causes, those are what is named "agent", being an human on a market that decides and acts (the peeing dogs don't count). Simple put: describe and compare what happens in the gold and silver markets and you find why people swap between them, which is what you name "nexus". Like you say here, until some past the why of people didnt matter, since the price ratio was just forced upon them. Silvers market is a newbie small fish one. Golds market is a pro big fish one. Pro milks newbie. G temporary visits S to get more G. The duration being the one of the swapping-related part of the price cycle. What you name as 'two individual commodities', is only a part of the reality. Another part is what happens inbetween them. The dollar and gold are also individual products. But as soon as people swap dollars for gold, a second story starts, added to both dollar and gold markets then existing stories. External price effects.
