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I am often
asked about the “omniscience” of TPTB, as if they are a bunch of
geniuses. I assure you they are NOT; but instead, a bunch of simple men that
happen to be in positions of power; mostly due to family connections, a
handful via inheritance, and the minority from hard work, above average
intelligence, and/or ruthlessness. All one needs to do is OBSERVE the ongoing,
worldwide political, economic, and social CONFLAGRATIONS to
realize there is no “method behind the madness.” To the contrary,
“Occam’s
Razor” tells you all you need to know; these so-called
“elites” are just chickens with their heads cut off, trying to
maintain a status quo in which they retain wealth and power.
Regarding
the Cartel’s “control” over Precious Metals, all they have
succeeded in doing is slowing the gold and silver bull markets, which
will – inevitably – fully express themselves by reclaiming
their monetary roles, ala “The Once and
Future King.” Yes, “they” have exploited the world for
a few decades, but not due to genius; instead, via LIES and CRIMINAL
ACTIVITY, such as covertly selling the U.S. gold reserves, against the
Constitutional rule requiring overt Congressional debate about such
vital topics.
In “Fargo” –
referenced in numerous RANTS –the ONLY way for William Macy’s
character to avoid prison was to expand his crimes – until of course,
everyone was DEAD. This is no different than how a Ponzi Scheme progresses
– like fiat currency, for instance – as new money MUST
continually be printed to avoid immediate collapse. As relates to the
PM suppression scheme, the “unforeseen ramifications” are
numerous – and deadly – such as the shocking SUPPLY
response resulting from capital starvation and profit deprivation.
As a
10-year oil analyst – from 1996 – 2005 – I recall marginal
oil production costs of $15-$25/bbl. And trust me, as co-author of the
bi-annual “Salomon Smith Barney E&P Spending Survey,” I had
more details on this topic than nearly anyone, save Matt Simmons (a long-time
colleague), Daniel Yergin (“The
Prize”), and a small handful of others. However, in the seven years
since I left Wall Street, a combination of MONETARY INFLATION and “peak
cheap oil” has caused production costs to SOAR, and with them, crude
oil, gasoline, and heating oil prices…
OPEC’s
breakeven price has soared from just $77/bbl two
years ago, to a whopping $99/barrel today.
-Arab
Petroleum Investments Corporation
I was
FLOORED to read the below article about OPEC breakeven costs, averaging
nearly $99/bbl versus $77/bbl
just two years ago. Mind you, the actual marginal cost of production
is not this high, but it can’t be far off if NEARLY ALL OPEC
nations have set fiscal budgets assuming such lofty prices. Oil producers
tend to be OVERLY conservative, so if they are ASSUMING $99/bbl oil, I assure you production costs are not far
off…
Who
Wants The Highest Crude Oil Price? Presenting The OPEC Cost Curve
On to gold
miners, where I was EVEN MORE SHOCKED to read average production costs
have risen to $1,300/oz – up nearly 30% in
the past year alone – and could rise to $3,000/oz
in just five-years…
The
current all-in cost per ounce of gold production has risen from as little as
$1,000/oz last year to about $1,300/oz for many producers today. In five years, miners will
need a minimum of $3,000/oz to keep producing gold.
-Aram Shishmaniann, World Gold Council CEO
…no
less, from the mouth of the World Gold Council – historically, an extremely
conservative organization…
Miners will need $3,000 gold price to be
profitable, WGC head says
Not that
it should be all the surprising, given soaring commodity prices, moribund
mining profits, and the fact that global gold production only last year
reached the peak levels of 2001, when gold averaged $275/ounce…
 
However, I
remember creating a PM data base in 2005 (I aimed to be a PM analyst, but no
one would hire me), when global gold production costs were closer to
$400/ounce. One could blame “peak cheap gold” for the
higher costs – in the same manner as “peak cheap oil”
– but let’s face it, the coincidence is too great, and
shared by MANY other commodities as well. Thus, MONETARY INFLATION is clearly
the primary factor for “EXPLODING PRODUCTION COSTS,” and MONETARY
INFLATION will likely catalyze marginal production costs above $3,000/oz five years from now – and potentially, MUCH
MORE…
Back to
the “genius” of TPTB, whose PM price suppression scheme has been solely
related to the maintenance of wealth and power – DAMN THE REPURCUSSIONS. But guess what? “Repercussions”
have arrived – as most mining companies have been DESTROYED by low
prices – yielding weak operating results – naked shorting –
yielding capital starvation – and PROPAGANDA – yielding weak
sentiment. Consequently, production has stagnated and costs surged, while the
best “human capital” has avoided the industry.
Given the
ENORMOUS timeline between new discoveries – of which there have been
VERY FEW in recent years – and first production, the odds of a material
increase in GLOBAL gold production is slim to none for the next 5+
years, while MONETARY INFLATION will ensure surging input costs. That
timeline will only grow longer due to the end of the “low hanging
fruit,” the increased amount of projects in remote areas or dangerous
political jurisdictions, heightened taxation, and an aging mining labor force
(trust me, this is a “young man’s industry.”). Therefore,
the price of gold MUST rise to at least $3,000
in the coming years, just to account for surging production costs, ceteris
parabus.
In other
words, the reasons to own gold (and silver) are NOT just rooted in
“breaking the Cartel,” or even as a plain old “inflation
hedge.” The fact remains, for MULTIPLE REASONS, that production costs
are EXPLODING, and will continue to do so, ad infinitum.
PROTECT
YOURSELF, and do it NOW!
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