Monday, June 24, 2013

Gold, the Cost to Produce an OZ and its failing price

Today we listened to further commentary related to the continued decline in the gold price.  Marc Faber hinted that maybe gold is the canary in the deflation coal mine.  Barrick announced dramatic staff cuts to manage their business citing weak gold prices.

What I want to know is ~ has the cost structure of these companies change THAT dramatically in the ten year run up in prices?  Gold ended 2002 under $350/oz.  Certainly there are many valid reasons for significant and even substantive increases in cost of production ~ but we're talking 400% ~ and NOW is the time to lay off people because we're approaching break-even of cost to produce?  Even the 'low-cost' producers are now over $1000/oz (i.e., Barrick 2013 Q1 $919).

Watching and Learning ~ Trading On.

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