This is old news, but the article is misleading. The truth is that the number of ounces discovered each year have been less than the number of ounces mined each year for several years now. There will be gold mines for the forseeable future, but the amount of ounces mined per year will probably never exceed the peak of several years ago and may continue to drop as time passes.
I read the same article in the Globe & Mail. A number of analysts have said before it wouldn't take much of a spike in demand to really send gold prices up since there seems to be constraints on increasing the supply. This article, if true, seems to reinforce the idea that the world goldpile might be more finite than we think.
I like gold a lot, but any "analyst" who says this can't really be considered an analyst at all. The flow of newly mined gold each year is so small relative to the total world stock of gold that constraints on new mining production can't really have much of an impact on the market except in the psychological sense.
I agree with cloudsweeper. article: What Barrick is saying is that the oxide layers of gold ore are being used up as they are the easiest and least expensive to remove, and as such are the most profitable as buyers don't ask how it came about as long as it is correct %gold at the purchase. Any additional gold in a placer mine is very available in the "sulfide" layer , which is usually under the oxide layer, and contains lesser % of gold and thus the profit margin lessens to obtain this gold. Since the price as a commodity is set worldwide, when cost of manufacture goes up, the profit margin goes down. When one buys stock in a gold mining company, the reserves must be looked at as to the amount of oxide layer left compared to the sulfide layer. Jim
I'd think that if the prices go high enough, that some of the gazillion tons already above ground would be put on the market, like people with jewelry, coins, etc. lining up to sell. Why do we need plenty more to be mined? There's already plenty that could be marketed at any time...I mean you can't really destroy or eat the stuff! I'll take a farm to feed me over all the gold in the world anytime.
I have a few friends who are still employeed at a local gold mine, the Gold Road Mine in AZ, and they say there are estimates of between 1.4 and 2 million oz of mineable gold in the mine, but it hasn't been cost-effective enough to re-open the mines in the past 6 years. For a mine that averaged about 30,000 oz of gold a year, I think that says a lot about where the real experts think the future of the metal is going. Guy~
http://www.gazette9.com/rt66/grmine.htm Looks like hard rock mining. Here is the story and a photo of coleguy's friends.
It's a hard rock mine. It's been shuttered for a while as it hasn't been profitable to re-open, but they do keep a skeleton crew to keep things maintained. I believe they still give tours through parts of it as well. There is an open pit gold mine called Hart Mine that closed about 15 years ago. I believe the company decided to close when the National Park Service fined them for environmental reasons. Guy~
Placer gold: gold that has been liberated from where it initially crystallized and has been transported (usually by water) and concentrated elsewhere by purely physical means. Oxide gold: can be placer, but also any gold that exists in material that has been exposed to enough air that sulfides around it (possibly encapsulating it) have broken down, leaving the gold 'free' and much cheaper to extract. Sulfide gold: Gold in its primary form, locked in some variable concentration of sulfide minerals. Can be relatively easy to extract, depending on the chemistry, or can be extremely difficult. Most large gold mines now must extract the gold locked up in the sulfide form. There just isn't a great deal of oxidized gold left, even less placer gold, by virtue of the fact that it has already been discovered and exploited. Having said that, there are many, many millions of oz of gold, in many parts of the world, that have not been extracted. The fact that they have not been is any combination of factors, such as degree of encapsulation and chemistry of sulfides (metallurgy), access, depth, proximity to water bodies and other logistical and environmental considerations, political stability of the host country, and climate factors.
While this may not be news to people that have followed precious metals for some time, it is to investors who may be getting acquainted with the sector for the first time. Many articles by analysts contain basic information, but often it is there to provide education, historical context and framework for a more complex analysis related to the relative attractiveness of the investment being discussed.
This is a great point. The amount "stored" in jewelry and so on is huge, and scrap is a significant contributor to supply (if you can call recycling "supply").
The point of my post wasn't that the information provided by the "analyst" was too basic. The point was that it was wrong. So instead of assisting new investors, it actually set them back below zero knowledge. Now they are going to have to unlearn before they can begin to learn.
Two things you should have uncovered in your analysis before buying the stock is (1) that it is spelled Hecla and (2) that it is primarily a silver mining company, not a gold mining company.
