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Peak Gold?

Discussion in 'Financial Cents' started by Minuteman, Nov 13, 2009.

  1. Minuteman

    Minuteman Chaplain Moderator Founding Member

    Barrick shuts hedge book as world gold supply runs out

    Aaron Regent, president of the Canadian gold giant, said that global output has been falling by roughly 1m ounces a year since the start of the decade. Total mine supply has dropped by 10pc as ore quality erodes, implying that the roaring bull market of the last eight years may have further to run.

    "There is a strong case to be made that we are already at 'peak gold'," he told The Daily Telegraph at the RBC's annual gold conference in London.

    "Production peaked around 2000 and it has been in decline ever since, and we forecast that decline to continue. It is increasingly difficult to find ore," he said.

    Ore grades have fallen from around 12 grams per tonne in 1950 to nearer 3 grams in the US, Canada, and Australia. South Africa's output has halved since peaking in 1970.

    The supply crunch has helped push gold to an all-time high, reaching $1,118 an ounce at one stage yesterday. The key driver over recent days has been the move by India's central bank to soak up half of the gold being sold by the International Monetary Fund. It is the latest sign that the rising powers of Asia and the commodity bloc are growing wary of Western paper money and debt.

    China has quietly doubled holdings to 1,054 tonnes and is thought to be adding gradually on price dips, creating a market floor. Gold remains a tiny fraction of its $2.3 trillion in foreign reserves.

    Gold exchange-traded funds (ETFs) – dubbed the "People's Central Bank" – have accumulated 1,778 tonnes, making them the fifth biggest holder after the US, Germany, France, and Italy.

    Ross Norman, director of theBullionDesk.com, said exploration budgets had tripled since the start of the decade with stubbornly disappointing results so far.

    Output fell a further 14pc in South Africa last year as companies were forced to dig ever deeper - at greater cost - to replace depleted reserves, not helped by "social uplift" rules and power cuts. Harmony Gold said yesterday that it may close two more mines over coming months due to poor ore grades.

    Mr Norman said the "false mine of central banks" had been the only new source of gold supply this decade as they auction off reserves, but they are switching sides to become net buyers.

    Barrick is moving fast to wind down the remaining 3m ounces of its infamous hedge book over the next twelve months, an implicit bet on rising gold prices over time.

  2. Brokor

    Brokor Live Free or Cry Moderator Site Supporter+++ Founding Member

    What's the answer to 99 out of 100 questions?
  3. Tango3

    Tango3 Aimless wanderer

    Gold's going to $5,000 fairly soon; isn'it...
  4. gunbunny

    gunbunny Never Trust A Bunny

    Not so hard to believe if the future value of the Dollar drops to the current value of the Yen...
  5. Brokor

    Brokor Live Free or Cry Moderator Site Supporter+++ Founding Member

    I am gonna buy all my gold when the Amero comes out. :p

    (assuming that it will be legal to buy gold then)
  6. dragonfly

    dragonfly Monkey+++

    You may not have to wait much longer.......!
  7. Thanks for posting about this! Keep posts coming!

    Gold Ira
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