Submitted by Tyler Durden on 12/15/2013
Due to western central bank price manipulation, the mining sector is in critical condition, the supply line is all but halted, and the physical supply is being swallowed up by Asia. The last shoe to drop is for major mining companies to start closing down production at major mines. Though this would be perceived as the end for gold, speculators will be happy to know that this would be the beginning of the biggest Fed induced bubble in history! But unlike previous Fed bubbles where they support the price increase, the gold bubble will be a result of western central planners mis-managing the gold price for the past 3 decades and finally losing control. As Peak Resources explains in the brief clip, the perfect storm is coming for gold…
Friday October 11th, gold trading was shut down for 10 seconds according to the CME.
Why, because someone sold 2 million ounces of gold at one time. Who does this? Who sells nearly 2 and half percent of annual gold production in a single minute? The gold valued at over $2.5 billion could not have been sold by a small trader, and certainly not the smart money, institutional investors know that you don’t exit a large trade like this…
So who could it be? Try the dumb money, The Western Central Banks.
As noted by organizations like GATA, TF Metals Report, ZeroHedge, and Shtfplan, gold manipulation is out in the open. Friday October 11th is just one of the daily examples.
With the western central banks suppressing the price, the eastern central banks have been happy buyers.
However, PeakResources.org believes this gold price suppression scheme is nearing its end.
With the Federal Reserve on a fiat currency suicide mission with QE forever, and the U.S. federal government bankrupt, the days of dollar supremacy are in its last days.
For gold though, the central banks have really screwed themselves.
At a price of $1,250, gold mining companies can no longer make a profit. Recent studies show their all in cash cost anywhere from $1,400 to as high as $1,700. Liquid fuels, human energy, and new exploration are costly in the mining process, so it is unlikely these costs can be cut to accommodate the low gold price.
Since gold’s peak in 2011, the TSX Venture exchange, home to the worlds gold exploration companies, is down more than 59%
The gold juniors index, the GDXJ, is down 83%
And the large cap gold companies, despite seeing a 400% increase in the price of gold over the past 12 years, are trading at lower valuations then they did even 20 years ago.
As noted in our video Peak Gold, no major gold discoveries have been found in more than 10 years! Gold production as a whole has plateaued.
Remember, all mines have a limited supply of gold, at some point in time they either deplete themselves or become uneconomical. Uneconomical meaning companies can’t mine for profit, which is exactly the case for nearly all gold mines today!
Consider a very famous gold mining region, South Africa
In 1971 South Africa produced 47.5 million ounces of gold, accounting for 68% of global mine production.
In 2011, South Africa accounted for only 7% of gold production with about 8 million ounces of mine production.
Despite all the technological advances and billions in exploration and development, South African gold production is down 82%.
South Africa isn’t an anomaly either, here in the U.S. production in the past 20 years is down 30%.
Current discoveries are small, in remote areas, and are lower grade deposits.
PeakResources.org recently attended a gold mining event in London, what we learned was that exploration budgets were being slashed! No development, no exploration, and a scaling back of projects.
What this all leads to is a price spike in gold, just as gold rose rose from $35 to $850 in the 70s, The Dow Jones from 2,000 to 11,000 in the 1990, and Bitcoin from a penny to $1,200 more recently, so to can gold have a parabolic spike.
The perfect storm is coming for gold…
Due to western central bank price manipulation the mining sector is in critical condition, the supply line is all but halted, and the physical supply is being swallowed up by Asia.
The last shoe to drop is for major mining companies to start closing down production at major mines. Though this would be perceived as the end for gold, speculators will be happy to know that this would be the beginning of the biggest Fed induced bubble in history! But unlike previous Fed bubbles where they support the price increase, the gold bubble will be a result of western central planners mis-managing the gold price for the past 3 decades and finally losing control.
With fiat currency being pumped into the system daily and the gold sector in shambles, the central banks are in for a big surprise because sooner or later supply and demand economics will crush the very people who are behind the devastation we have seen in the gold mining and precious metal industry.
The mines aren’t the supply chain for gold – stockpiled gold is the supply chain.
Thousands of years ago – gold was valuable. 2013 – gold is valuable.
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