Morgan Stanley seems to think that Gold US $800 is plausible in a worst case scenario... http://www.bloomberg.com/news/artic...-800-and-it-s-not-because-of-china-s-reserves ETA: AFR and SMH have a story stating that Deutsche Bank says gold's fair value is $750/oz. http://www.smh.com.au/business/mark...-value-is-us750-an-ounce-20150727-gil4ns.html
The Deutsche Bank article is priceless haha not $750 but "fair value". Fair value for whom ? The miners who will all be out of business at $1000 never mind $750, The physical market will no longer exist at that price but it is fair value for the paper futures contracts they print at no cost at all. If they can produce an endless supply at no cost then $750 is fair value ? Unfortunately many inexperienced gold stackers will be scared out and sell hoping to buy back in at $750. I have news for them its not going to happen. If they do force gold down to $750 please mortgage your house, sell your chickens and buy up every last ounce available.
Production costs for oil in many parts of the Gulf of Mexico and the Canadian tar sands are often in the range of $60 to $120+/barrel of oil yet they continue to produce oil with current prices approaching $50/barrel or less. Similarly, it seems that many Australian iron ore mines have figured out how to continue operating despite iron ore prices being below their costs of production. Seems likely that the gold miners could figure out a way of muddling through if the price of gold drops below their production costs for awhile seeing as other resource extraction industries have figured it out. Manage costs better, be more focused in your spending, shutdown high margin portions of your mine, automate more, etc. I just thought it was interesting that some of the big banks were more pessimistic about the price of gold than the $900 bottom being forecast in this thread.
Have you looked at how many oil and mining companies in the junior sector have closed up shop this year ? All this BS talk about producing at below production costs ? It may go on for short time not for long. Mining companies have already cut most corners to keep in business at $1100 what will they do at $750. That easy they close shop. Asking the Banks what the price of gold should be is a complete joke. The banks have been manipulating the gold price since the days of the London gold pool. They are sure to tell you haha
A bunch have. On the other hand a bunch of others are still in business. Can't get too worked up over the "manipulation". It happens in most industries to varying extents, doesn't seem like the situation with gold is dramatically different. Coles and Woolies are busy manipulating the price of carrots...
Your insight is spectacular. Yes carrots are like gold ? They are both orange / yellow in colour. Yes Wollies and Coles are just like the Fed, JP Morgan and GS. I am sure you don't get worked up by manipulation but if you were a miner and your company collapsed like most of them are you may feel a bit different. Or perhaps you just lost your job with a mining company? Or perhaps you are Australia who's commodity economy is going down the toilet. Don't worry you sound like you have plenty of time to get worked up.
Deutsche Bank I was reading it on smh.com.au If anything fair in this World yes Gold can be as much as they want it to be. But Deutsche Bank first needs to fix its own market manipulation issues within Germany and deal with Euro. Mike Maloney can look after Gold and Silver
Talk to the poor farmers who are struggling to stay in business while Coles and Woolies artificially push down the price of their products. Yes Woolies and Coles are behaving just like the Fed, JP Morgan, etc.
When it comes to operating below cost of production, sometimes it pays. Shutting down "systems" (losing staff, contact, clients, "the whole system") in such a way that they can be restarted in the future can be more costly than keeping them running on a daily basis. Much of the "cost" has already been expended, and there is a chance of recovering some of those costs. As an example - I worked on a celery farm. Season was turning out to be a disaster. But we kept going even though the business was making a loss. But not on a day-to-day basis: the price we were getting for a day's production was still more that what it cost to operate for the day, therefore each day that was the case, we were recovering some of the fuel, time, etc that had been paid for in getting us to that day. I imagine that it is the same for mining companies - you float by on past profits hoping to be ready to cash in on the upturn.
Gold giant Newmont keen to expand NT mine despite sliding prices The recent slump in gold prices is not deterring Newmont Mining from expanding its Tanami mine in the Northern Territory, with the Colorado-based giant saying the expansion should remain viable even if prices fall to less than $US1000 an ounce. 26 July 2015 http://www.smh.com.au/business/mini...e-despite-sliding-prices-20150726-giju5x.html
Falling commodity prices, falling precious metal prices = lack of investment dollars for junior miners / exploration = lack of supply for the long-term. Sure...many miners will mine richer sources on their tenements but some mines have a particular ore grade and a "mix" ratio for the way they extract; it's just not easy to change a production method. Lower paper prices will see miners out of business and takeovers.
The miners have already cut expenses to the bone. There is no exploration and no new development. Look at these companies balance sheets and write downs. The next major move down should it happen will result in liquidations on mass. Look at the South African gold mining companies - Look at these mainstream figures http://www.mining.com/the-stunning-collapse-of-gold-production-in-south-africa/ Anglo cut 50,000 jobs ?? http://www.bbc.com/news/business-33652530 and Australia ?? http://www.smh.com.au/business/markets/mining-losses-weigh-heavy-on-the-asx-20150725-gijwrx You know if this is from the mainstram apparatchik press, the truth is much worse.
You do realize that post #34 discussing the expansion of a gold mine in the NT is on the same page don't you? It even looks like you thanked Holdfast for that post, so presumably you read it... South African gold production has been declining since around 1992 and continued to decline even as gold was spiking to close to $2000. Looks like the mines there might be running low on gold... On the other hand, global gold production has increased... https://en.wikipedia.org/wiki/Peak_gold#/media/File:World_Gold_Production.png Looks like the majority of their income comes from mining things other than gold... Australia has figured out how to transmorgrify iron into gold? I don't disagree that collapsing iron ore and coal prices have hurt the mining industry in Australia and probably globally as well. On the other hand, in Australian dollars, the price of gold has increased since last year and from the sounds of it, the price of labour for Australian mining companies has plummeted since the peak of the mining boom. So maybe not such a horrific time to be an Australian gold miner... at least it seems better than mining for coal or iron ore.
