Gold is more than $500 per troy ounce these days. I believe that it has risen steadily for five years. I would assume that the average cost (worldwide) for recovering gold by mining and mineral processing is about $300/tr oz. This is a statistic that is held close to the vest by mining companies. With the price over $500/ tr oz and the cost to produce gold significantly lower than that, the volume of world gold resources must have grown substantially over the past five years. There is usually a nine-year (give or take) lag between economic inspiration and actual on-line production of mineral commodities. Will idle metal mining operations fire up? Will marginal operations immediately expand production? Will new ore deposits be developed? Will there be a new era of gold exploration? Will world gold production increase over the next few years? Will a potentially expanded supply of gold cool the price-trend? Or will the decline in reserves and diminished production from South Africa and other traditional gold-producing countries cause the commodity to maintain its elevated price. I am inclined to think that a 40 percent increase in the price of gold, sustained for five years, is likely to expand production despite all the omni-present negative factors such as fuel costs and environmental pressures. Forty percent is 40%. :kewl:
Quick Dog - Check out the annual reports for the major gold mining companies and you will find that collectively they are producing gold much faster than they are replacing reserves. The cost figures you cite are cash production costs for existing mines and do not include the costs of new exploration, mining rights, environmental groups, permitting, building infrastructure, and building the mine itself. Despite the advances in technology and money put into exploration during the past several years, I believe only one new 5 million ounce deposit has been found that has enough favorable factors to be put into production. And you are correct about fuel costs. Newmont Mining has reported that energy costs represent about 25% of the total cost of operating a mine. Mines also use a lot of steel, which has also increased substantially. All things considered, it is less profitable to build a new mine now for many companies than when the price of gold was 40% lower than today. None of this is a guarantee that the price of gold will rise in the short term. Longer term, the price probably has to go higher unless demand for gold falls a lot.
:goof: It could go to the sky in price!! It wont matter to me, I dont have enoughf money to play the gold game, Iam lucky to have 2coins to rub together........
All that is true, but there is still pressure to develop existing resources and reserves as the price of metals go up. Secondly, American mining companies seldom fully report mineral resources to the government. The Republicans eliminated the Bureau of Mines in the mid-1990s. Even then production ststistics were often imaginary. Unfortunately, there are legions of Local, Federal, and State politicians (mostly anti-business Democrats) and county assessors looking at corporate mineral reserves as unsecured property. Proven reserves are taxed in many jurisdictions. Thirdly, and related to the taxation issue just mentioned, there are speculative mineral resources that go unreported, or undeveloped, all over the world. Mining geologists may know, or strongly suspect, that a mineral deposit may exist in the subsurface, but everyone keeps the lid on it to avoid competition from other companies or interference from government agents and their environmentalist associates. When the price of gold amd associated metals continue to rise, mining companies re-evaluate thier cash-flow and mineral resource positions. Fourthly, whereas here in the United States environmental zeolots and their government associates have crippled or destroyed various segments of the mining industry, including essential construction and industrial mineral facilities, few restrictions on mining exist in the third-world, Russia, China, Mexico, and to some extent Canada. The United States typically spares no expense in limiting or destroying its domestic heavy industries. I still think there is more gold out there to "exploit", which was the traditional mining term for the softer contemporary word "recover".
It will be interesting to see which view of the future turns out to be correct. My experience in life has been that in the absence of metal backing for the money supply, inflation is a constant. I think the missing piece of the puzzle for those who believe everything is and always will be is cyclical is that they assume a constant value for the dollar. But a 2005 dollar is worth less than a 1955 dollar [or 65 or 75 or 85 or 95 for that matter]. I have a blue book from the 1960s with uncirculated Morgan dollars selling for $1.25 and some of the key date coins selling for 1% of today's prices. The people who believe in coin cycles are implying that these prices will return. I have my doubts.
I wonder if coin prices don't do something like the highly scientific coin price cycle diagram that I drew for you all. They go up, and they do go down. But for the most part, maybe they don't go down quite as low as they were before. For example, maybe a particular coin goes from being valued at $1, to $2, then back to $1.50, then up to $2.25, then back to $1.75, etc. So, it gradually works its way up. It's kind of the two steps forward, one step back thing...just a thought. Feel free to poke holes in it. :hammer:
I agree. I always feel a tinge of guilt posting on the topic of gold and silver because it isn't really what the forum is all about. Fortunately for everyone else, my work here is done. :kewl:
I don't know how the other Mod's think but IMO this is in CoinChat...it does have something to do about coins as gold...coins...its just like taking about what kind is the best holder for coins...that isn't a coin but it has to do with coins. Speedy
My apolgies to quickdog....mixed you up with anchor1112. Figured one thread posting the daily spot prices of gold and silver was enough. :goofer:
The prices of most commodities, including "existing homes", seem to vary just as you say, There appears to be a sine curve of sorts (cyclic up and down) that is superposed on an upward and steady regression curve.
