Just reading a few things lately about platinum and thought I would pass it along. The big news is how South African mines are changing everything and opening new mines that will be very shallow and employ just a fifth of the workforce currently. A new mine will be open in 2018 that the company estimates will only cost $322 per ounce of platinum group metals, (platinum, palladium, rhodium), versus industry average of $1000 an ounce now. Could be a huge game changer. I am kind of leery of investing in platinum after reading this. The lighter news was I read ancient Egyptians were skilled in the use and working of platinum. That was serious news to me. I never knew ancient cultures had even heard of the metal. I imagine it was simply natural deposits of the metal, in small quantities, but still.
I think what that really means is that, if they're not digging deep, they'll have to tear up a lot more surface area to unearth the same amount of metal. They'll probably be abandoning a lot more mines a lot faster than before.
I am not sure if I would be taking it that lightly, Jim (Desert Gem) post an article where one large mine was producing Gold at $600 per. In addition with the drop in Energy prices, Silver has got to be coming out of the ground cheaper too. With all the advances we could continue to see drops in costs. The cost of production, at the end of the day, is really the most important component of the price of a commodity.
In a stable market, yeah. But, I'd not discount the importance of fear. The market we had over the last 7 years was largely driven by fear.
Actually, digging deep they say is much more energy intensive. The article I read, (sorry WSJ so cannot post a link), said they started digging deep and the industry just evolved that way, (cheap labor). With all of the strikes and wage increases, now its way cheaper to buy machinery, move more dirt, and hire far fewer employees.
Yes, fear was the driver, but there is something to be cautious about there. Sometimes things only work once. For the vast majority of folks who got caught up in the fear, bought bullion, and drove the price up, well it just didn't work out for them. Even if you believe fear will return, (I don't near term) it is my opinion that the droves of folks will not be jumping into Bullion as "Safe" like the last time. Once burnt, twice shy, and there is NOTHING "Safe" about Bullion. Also, we all know there are WILD swings both above and below production costs of a commodity, but that is the base line it will return to sometime. We just never know when.
I agree Mike. The one thing I would say in favor of gold and silver, (platinum now has me spooked), is oil. Oil is the huge input that metal pricing long term usually tracks. I simply believe oil will be going back up after the world has absorbed this crush of oil from the US in a couple of years. Everything else I read about oil is negative. Many exporters today will become net importer in less than a decade, as their own economy grows. So, I basically view gold and silver as storable oil, and given my outlook for oil markets do not think its a horrible play for long horizons. Someone mentioned a miner with $600 an ounce cost for gold. One, that has to be about the lowest on earth. Second, even that miner is MUCH higher if oil is $120 a barrel again, right? Plus, I get to buy shiny, pretty things that amuse me like a puppy.
According to the history books, platinum was discovered around 1670, so I wonder who wrote that article?
Yep, fear works both ways. After the collapse, people will fear metals for a long time or until the next event cause fear to reverse directions.
It was in an ancient cultures book. I was shocked as well. This link mentions ancient Egyptians prized it as well: http://www.flashmfg.com/platinum1.htm
Well, I just saw this today. They claim, some Bakken oil can be has for $29 per Barrel. I am not sure why they wouldn't be going fullspeed ahead by the time oil hit anything close $50 - $60. Oil is just not in that short of supply, it just seems the solution to growing economies needing more oil, is simply to drill another hole. You may be right, but I think we will be in cheap oil for a while http://www.bloomberg.com/news/artic...problem-for-some-cost-cutting-bakken-drillers
If they can get the Dakota Pipeline done by the end of next year as expected, that should push the breakeven down even further. I have a friend that is a frac tech up there and they've been getting chiseled down on hours and housing benefits. Lots of costs have been cut and crews have been moved around. While oil is down right now, they are focusing on drilling higher yielding areas vs the lesser. The big risk is in well replacement. They may keep on drilling, but they may not keep up with the wells that start going offline.
Yeah, that is the concern. I do not think enough people are taking into account the very short life of fracked wells versus traditional ones. Old wells could last 30-40 years, fracked wells last a few years. I simply believe this surge in oil will calm down, and with the rest of the world decreasing available export supply put new pressure on prices upwards. Mike, you know I am not any commodity "Peak" anything, but I am simply viewing cheap oil as somewhat temporary, (2-3 years), and going back to higher prices. As such, I am looking at putting some pm away at reasonable prices right now. Problem is, the premiums are still high. Hopefully they retreat in the upcoming months.
I used to catch and oil talk radio show when I traveled ND. I have heard those wells can last as little as 3 years, and some as much as 15-20. I think they have a handle on the good ones and which will be lesser. On that show the prediction was made that the Bakken expansion was about done and they would flatten out their production numbers within the next year or two.
Gold/Platinum spread is now at ~$160, and there is almost no room to make a platinum for gold swap due to markups. I like to look for the arbitrage opportunity between the two, but the markups are just way wrong to even try right now.
I'm just hoping I stumble across some random piece in my local coin store. My problem is I blow my cash like yesterday on a 1/4 oz gold Britannia for $285. I'm a sucker for Britannia.
