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Gold price dives through support to new low. Gold Bubble continues to deflate.; Gold price to drop another 15% this year say strategists at Societe Generale
Topic Started: 3 Apr 2013, 10:29 AM (37,655 Views)
herbie
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The goldies are putting in a valiant effort to defend their 1280 line.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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herbie
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Damn. Look at those goldies go! The little buggers have clawed their way back up 15 plus bucks.
This is almost as much fun as watching a 1980s type State of Origin played in the mud! :re:
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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herbie
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Well, the goldies have got a bit of a buffer again between them and their 1280 line - Well done chaps ... Well done indeed! :re:
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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GloomBoomDoom
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http://www.news.com.au/business/breaking-news/gold-closes-strongly-higher/story-e6frfkur-1226731971140
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goldbug
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Gold, if the world continues to desire it, has a base price dictated by the cost of exploration and mining. I believe we are around that price now. The price runup from $450 aussie to the current $1400 aussie can all be explained by the rise in the price of oil. It didn't matter that the world was in a buying frenzy since most of that frenzy was diverted to paper gold variants which do not require actually mining the stuff out of the ground. It's always has been, and still remains a nice inflation hedge and a hedge against madness like hyperinflation.
Shadow was hopelessly wrong about the Gold Bull Market.
What else is he wrong about?
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Admin
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Quote:
 
The bull case for goldminers

October 2, 2013 - 2:26PM
Mike King

The subject of investing in gold and goldminers evokes similar sentiments as suggesting an investment in Australian property. People tend to fall into one of the two camps who either love it or hate it, and very few people will sit on the fence.

Earlier this year, my Motley Fool colleague Scott Phillips outlined the potential risks when investing in gold or goldminers, but we may have reached a point where there is significant upside potential from here.

The gold price tumbled 3 per cent overnight to $US1289 an ounce, hitting a two-month low as traders reacted to the US government shutdown, and has now fallen 23 per cent so far this year. But the London Bullion Markets Association annual survey of about 25 of the largest bullion dealing banks and trading houses found this year's decline is being viewed as a correction rather than the start of a continuing slide in the gold price.

It's entirely possible, though, that the gold price could fall further from here, if the US Federal Reserve begins tapering its stimulus program, and could stay down for much longer than expected. But for risk-tolerant investors, some well-chosen goldminers might be worthy of consideration.

Having hit a low of $US1180 an ounce in June, the gold price has been held up by physical demand from consumers, particularly in China and India, as well as the US Federal Reserve's ongoing stimulus program. The World Gold Council found that consumer demand jumped 53 per cent in the second quarter, with jewellery demand up 37 per cent over the same quarter last year. Bar and coin investment rocketed up 78 per cent, with Chinese demand up 157 per cent and Indian demand up 116 per cent.

At the same time supply of gold is 6 per cent lower than a year ago as miners closed high cost goldmines and optimised other operations to reduce costs – even if it means lower production. At the current price many goldmines are unprofitable or breaking even and supply is likely to fall further, putting more upward pressure on the gold price.

As Scott put it in his article, you want to buy goldminers when the price has fallen to the point at which it is almost unprofitable to mine for more gold. At that price, new mine expansion is unlikely, keeping supply in check.

Read more: http://www.smh.com.au/business/the-bull-case-for-goldminers-20131002-2us1r.html
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b_b
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goldbug
3 Oct 2013, 09:44 AM
Gold, if the world continues to desire it, has a base price dictated by the cost of exploration and mining. I believe we are around that price now. The price runup from $450 aussie to the current $1400 aussie can all be explained by the rise in the price of oil. It didn't matter that the world was in a buying frenzy since most of that frenzy was diverted to paper gold variants which do not require actually mining the stuff out of the ground. It's always has been, and still remains a nice inflation hedge and a hedge against madness like hyperinflation.
Most gold mines remain insanely profitable globally. As the gold price falls, marginal mines will be shut, but even a large fall in gold will only make a very small % of mines unprofitable. Gold needs to fall to $400/oz for a credible supply side story to emerge.
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Edited by b_b, 3 Oct 2013, 10:35 AM.
(S – I) + (T - G) + (M - X) = 0
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herbie
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The mob I was working for in the very early 2000s could still turn a profit at USD250.
We didn't like it! But we weren't going to close up shop either ...
By 'n my best assessment is that the industry just let its costs get RIGHT out of hand during the boom?

Hmmm - The goldies have been pushed back a tad - Just a bit below AUD1400 again.
A Professional Demographer to an amateur demographer: "negative natural increase will never outweigh the positive net migration"
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MMM
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herbie
3 Oct 2013, 04:22 PM
The mob I was working for in the very early 2000s could still turn a profit at USD250.
We didn't like it! But we weren't going to close up shop either ...
By 'n my best assessment is that the industry just let its costs get RIGHT out of hand during the boom?

Hmmm - The goldies have been pushed back a tad - Just a bit below AUD1400 again.
Funny that herbie,you are maybe more familiar with the gold market but wish to sit back and have your dig at our goldbugs,
I am more of a silver bug, and gave you all the low for the year by telling you all what a super bargain silver was on the 26th june this year, the exact low for the year

But the one thing I like more than silver is gold shares, I have explained all this long long ago.

Anyway, as for mining and mining costs of gold there is things you guys dont consider but since you speak of mining costs , I will briefly explain.
As many of you know it costs some companies more to min egold than others and as you mentioned the costs of mining have increased since the boom, mainly because as the priced rised , many spent more on exploration costs and others would mine what used to be unprofitable mines. for example, I recently skimmed over a report from sbm, 140 pages long. which ran at a loss this year after making huge profits last year. they had aquired other mines with lower grades of gold, one mine they had were digging out 2 grams of gold per tonne, another they were getting 4 grams per tonne and another were getting 8 grams per tonne. they only just recently sold of fthe mine which was only getting 2 grams per tonne , which should lift and increase their profits over the coming financial year. barrick gold in the US , has three or so mines for sale in Australia, maybe a couple around kalgoorlie and and another at the plutonic mine, theses have now become less profitable to them since mining costs have increased and the gold price has dropped back.

Anyway the point I am getting at this, firstly many gold stocks have been hammered much more than gold itself, some gold shares are now cheaper than they were when gold was $500 per ounce, they are dirt cheap looking at the fundamentals, some companies can mine gold for $800 an ounce , others it may be costing them $1100 per ounce , depending on the grade in the ground, the depth of the gold, the hard or soft ground they are working with and the experince and quality of machinery they own or already own. So we have seen many companies close some mines or sell off some mines that were less profitable than others since prices have declined over recent times.

But here is the thing ,if a company is mining gold at a cost of say $1,100 per ounce and gold is selling at $1200 per ounce ,they are making $100 per ounce if gold goes up to $1300 per ounce , the profit for the company instantly doubles , if it were $1400 per ounce it quadripes the profit for the company, so a little rise from where it is increases prrofits enormously. and hence the closure of some as profits have decreased enormously on some since price falls. So some gold stocks are a bargain and a small increase in the gold price has massive increaese in company profits. I cannot stress enough how undervalued some are and how some of you may like to take a closer look. you have sort of missed the bottom as it seems that came in late june this year, but there is still much to br had, even on short plays.


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herbie
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MMM
3 Oct 2013, 05:41 PM
Funny that herbie,you are maybe more familiar with the gold market but wish to sit back and have your dig at our goldbugs,
I am more of a silver bug, and gave you all the low for the year by telling you all what a super bargain silver was on the 26th june this year, the exact low for the year

But the one thing I like more than silver is gold shares, I have explained all this long long ago.

Anyway, as for mining and mining costs of gold there is things you guys dont consider but since you speak of mining costs , I will briefly explain.
As many of you know it costs some companies more to min egold than others and as you mentioned the costs of mining have increased since the boom, mainly because as the priced rised , many spent more on exploration costs and others would mine what used to be unprofitable mines. for example, I recently skimmed over a report from sbm, 140 pages long. which ran at a loss this year after making huge profits last year. they had aquired other mines with lower grades of gold, one mine they had were digging out 2 grams of gold per tonne, another they were getting 4 grams per tonne and another were getting 8 grams per tonne. they only just recently sold of fthe mine which was only getting 2 grams per tonne , which should lift and increase their profits over the coming financial year. barrick gold in the US , has three or so mines for sale in Australia, maybe a couple around kalgoorlie and and another at the plutonic mine, theses have now become less profitable to them since mining costs have increased and the gold price has dropped back.

Anyway the point I am getting at this, firstly many gold stocks have been hammered much more than gold itself, some gold shares are now cheaper than they were when gold was $500 per ounce, they are dirt cheap looking at the fundamentals, some companies can mine gold for $800 an ounce , others it may be costing them $1100 per ounce , depending on the grade in the ground, the depth of the gold, the hard or soft ground they are working with and the experince and quality of machinery they own or already own. So we have seen many companies close some mines or sell off some mines that were less profitable than others since prices have declined over recent times.

But here is the thing ,if a company is mining gold at a cost of say $1,100 per ounce and gold is selling at $1200 per ounce ,they are making $100 per ounce if gold goes up to $1300 per ounce , the profit for the company instantly doubles , if it were $1400 per ounce it quadripes the profit for the company, so a little rise from where it is increases prrofits enormously. and hence the closure of some as profits have decreased enormously on some since price falls. So some gold stocks are a bargain and a small increase in the gold price has massive increaese in company profits. I cannot stress enough how undervalued some are and how some of you may like to take a closer look. you have sort of missed the bottom as it seems that came in late june this year, but there is still much to br had, even on short plays.

I'm not having a "dig" - Rather, stating my impression.

I've got about 7 oz of Au 'n about a pound of pre decimal silver coins maybe? (All bought back around 2005.)

Having worked in the industry, it remains of general interest to me. But I'm not 'invested' in it in any real way at all.

And never will be. Unlike yourself, I simply don't value it highly.

Though I do find jewellery 'n gems rather interesting generally.

But again I'd never 'load up' on them so to speak - Simply don't see the value.
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