Friday, 24 January 2014

GFMS Gold Survey 2013 & Updates - Gold Mine Supply & Cash Cost Curves

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2013 Report    /     Update 1      /       Update 2

Interesting Charts in Update 2......below

Global cash cost curves. 
The threat - 70% of mine supply is still cash breakeven at $800
Below $1,200 chokes the last 10% of mine supply.
While the industry moves to presenting all in sustainable costs it should still be cash costs which drive the marginal mine closure decisions which reduce supply, when price cures price.
Of course mine supply is marginal against above ground gold hoards, so the impact of mine supply, and certainly 10% of mine supply will be debatable. 
If nothing else the past 3 year bear has likely put substantial delays to the industry addressing production declines post 2015/7 - National Bank Financial's Gold Production Cliff

Have miners been wise or stupid since the 2011 gold price peak?
Hedging has continued to fall. 
Forward sales & hedging has not pressured the gold price down.

Production Costs are showing a turn downwards. 
How much is due to high grading and sterilising future mine life as suggested by Brent cook?

If miner hedging has not impacted gold prices there looks to be a very strong relationship with ETF holdings where ~700T have been dishoarded by western ETFs. 
How many more want to sell - or buy?

Central Banks are not selling but purchases have slowed. 
Unless as some expect China will announce substantial increases this year.

Biggest Gold Miners - Goldfields - ouch!

Biggest Countries

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