GOLD MINING INDUSTRY: Fuel Costs Explode Over The Past Decade
I found this report to be very interesting. There have been a lot of reports out over the past few years that dive into fact that costs have been rising at a very high rate for gold miners. The reports linked below focuses on the costs of gas and energy. These costs have been a main driver of the high costs to pull the metals out of the ground and unfortunately I don’t think they will be coming down anytime soon.
MONNY MONNY ! https://www.youtube.com/watch?v=GroGCLCRy80
mining gold ! https://www.youtube.com/watch?v=_feJwOwsCzc info !
The relationship between oil/energy and gold (stocks especially) is not something that is talked about on a regular basis. You are right in the sense that if oil were to significantly drop then the miners would be much more attractive. Beyond that we would need to see other forms of energy drop as well. We will see if oil tumbles, I am skeptical.
Just wanted to say thanks for linking my work on this site. In addition, I wanted to clarify a misconception about Energy & Gold. There is this notion that rising energy prices will push the cost of mining gold much higher…. thus the price.
Many of my readers believe the rise in the price of energy will be the factor that pushes the value of gold to new highs…. I disagree. In my research, I have found that the world can’t afford high oil prices. The only reason we can afford the expensive stuff today is due to the rigging of the market by the Fed and member banks easy money policy.
The ENERGY FACTOR that will push the price of gold to new highs is the collapse of the current U.S. Dollar Regime, including the U.S. Treasury market. Once this occurs, it will destroy the commercial viability of most marginal oil and gas producers… FOR GOOD.
Which means… the SHARK FIN decline of global oil production will destroy the value of most paper assets forcing investors to flee into physical assets such as gold and silver.
While I realize this is just another opinion… I believe it is a highly likely scenario.
steve
I agree with you, Steve; the rise in the price of energy will not be the key factor that pushes the value of gold to new highs.
Selected groups want to make this gold/silver investment equation much more complicated than it really is. It appears that most talking heads want to infuse a scenario that will bolster a particular talking point, and in this instant, its energy. None of this information is new.
Energy is in everything you use, eat, and consume. Fossil fuel energy (oil) is the very foundation of life itself.
In the big picture gold/silver are so far down on the chart of life’s resource importance it almost comical.
The multitude of reasons given why gold and silver are, or are not doing such and such on any given day has become an exercise in hysteria and meaningless convoluted claptrap with a noticeable lack of actionable information.
Everyone in the hard currency community spends every waking moment trying to convince the average Joe/Jane that nefarious activity trumps the logic of every day men and women and supply and demand of world markets. Its become a badge of honor to create some miscellaneous contortion of market events to express price action in everything. But no one has the PM community beat, this is a cultivation of group derangement. Why are people unable to thing logically about this subject matter.
The supply / demand factors are far far more important than any other day to day gyrations coming from a soulless and gutless Wall street bucket shop or a bankrupt government. Why?, because price action is dictated and expressed by greater world market forces from which world populations give it value.
There is either a demand or lack of demand that produces a market price change or reaction to every commodity price discovery.
Pretty much anyone who has the intellect to boil water or cook an egg knows that energy plays one of the most important equations in human life as we know it. In-fact, life as we know it would stop in its tracks if petroleum products became unavailable tomorrow. The only thing that would have value would be water and food to feed yourself. It would be planet of the apes on steroids!
My counter to the excellent SRSrocco summation of the energy impact on PM is not meant to demean or to distract from the message of the energy importance and the pricing machinations that are influenced from the oil equation. They are indeed vast and undeniable.
Its far more simpler than even the energy impact and it costs. Will people in the future find the PM’s as an important resource to buy and hold from a life sustaining equation or wealth containment medium or will they turn to other more intrinsically valuable items that benefit them in a more immediate sense.
It all depends on how hard life actually gets.
When push come to shove, people are making this price discovery paradigm of PM far too complicated and actually far more important than it should be.
It all about supply and demand and nothing trumps that paradigm in the world of finite resources and the basic instincts of the human animal who will value day to day subsistence of life sustanment above all else, even gold and silver.
No one is going to mine and may be work for break even or a loss. The price of metal must rise or some mining operations will either high grade until they can’t or shut down. The crowd that thinks production increases are as easy as flipping a light switch are dreaming in technicolor.
Great link Cory. That is plenty of evidence to ponder over when we consider the relationship of energy to gold. It should also alert us that if oil costs suddenly rise that miner returns will be hurt unless the gold price keeps pace. Alternatively, there is an oil floor under prices that can only be corrected by a steep drop in the price of fuel. Presumably, if we did enter a depression and oil dropped sharply in conjunction with widespread automation and driverless trucks then gold could again outperform…..but who here would predict oil is about to tumble?