Precious Metals Market is Active

By Mike Fuljenz –  

Gold corrected last week but then it rose $20 Monday morning.  Silver rose even more (2.2%) Monday morning to surpass $33 for the first time in a month, and platinum rose $19.  Some of these gains are due to a weaker dollar, but gold’s main engine now is fear of the fiscal cliff and global tensions in the Middle East – which have caused a surge in the price of crude oil.  Gold was down last week because demand in India during its Diwali festival was weaker than expected, but silver rose last week and platinum has been stronger than gold in recent months, due to falling production in South Africa resulting from mine strikes. Major dealers across the country are reporting some very large gold coin orders.

Gold Discoveries Getting More Scarce

The supply side of the gold supply/demand equation is getting squeezed because new gold discoveries are fewer and farther between. As older mines are worked out, there are fewer new mines to replace the lost supply.

Even with record spending on exploration – $8 billion last year – gold discovery rates are sliding, according to Jamie Sokalsky, chief executive officer of Barrick Gold Corp., the world’s largest producer. There were only three new gold discoveries last year, compared with 11 in 1991. None of the three most recent ones could be described as “supergiants” holding more than 20 million ounces, Sokalsky said.  He predicted gold’s bull market shows no signs of weakening, but it won’t help find more gold.

“I don’t see a surge in gold production if we saw a gold price of $3,000,” Sokalsky said. “At a higher gold price, we’d still be experiencing the same challenges. I’d suggest there’d be very limited response to that higher gold price.”

“It’s getting harder to find large deposits and to get those deposits into production takes at least twice as long as it might have taken a decade ago,” Sokalsky said. “We’re not going to see new mines coming in as fast as we thought to replace old mines that are closing.”

“Getting mines permitted, dealing with the government and the communities, environmental issues, all of that takes so much longer,” said Sokalsky. “It also costs multitudes more to build a mine and to finance that.”

Global gold mine output may increase only 0.7% in 2013, the slowest pace since 2008, according to Barclays, which forecasts that total physical supply may actually shrink 0.4% next year.

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8 years ago

i’m afraid of losing my 401k. can i pay my taxes my plan and convert it to gold and how do it

8 years ago

How do you write an article about the price of gold without once mentioning the price of gold?

Ann, RN
8 years ago

There’s a lot of gold still in Idaho, but the environmentalists with their lawyers and judges are, and have been making it close to impossible for companies to mine. And then, of course, there are the governmental regulations. Sigh……

8 years ago

Very good article by the way.

8 years ago

As long as the Federal reserve keeps printing $40 billion a month in new, ever more worthless new dollars to fund the spending spree going on in Washington, both gold and silver will continue to increase in value.

Joe the dentist
8 years ago

Here’s a thought question: How much gold do you think is buried each year…as in six feet under?

Bert Powers
8 years ago

Keep stacking gold and silver and take possession. Good article.

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