Advertise | Bookmark | Contact Us | E-Mail List |  | Update Page | 

Commentary : Gold Review : Markets : News Wire : Quotes : Silver : Stocks - Main Page >> News >> Story  Disclaimer 
Latest Headlines

Gold Seeker Closing Report: Gold and Silver End Slightly Lower
By: Chris Mullen, Gold Seeker Report

COT Gold, Silver and US Dollar Index Report - December 10, 2018

Silver Investors See Palladium as the “Canary in the Coal Mine”
By: Clint Siegner

The Prodigal Parent
By: Keith Weiner

The Trouble with Geologists
By: Mickey Fulp

SWOT Analysis: Gold Heading for Its Best Close Since July
By: Frank Holmes

Technical Scoop - Weekend Update December 10 2018
By: David Chapman

Every Bubble Is In Search Of A Pin
By: Chris Martenson

Precise Benchmarks If the Selloff Continues
By: Rick Ackerman

The fundamental backdrop turns bullish for gold…almost
By: Steven Saville


GoldSeek Web

The Plight of the Miners

 -- Published: Friday, 26 September 2014 | Print  | Disqus 

By It's a Mystery

Oil is the lifeblood of the economy. Natural Gas and Coal run a close second in that regard. You cannot run a modern economy without energy. The same is true of farming. You have to eat in order to live.

Have you ever wondered why energy and farming are so heavily subsidized? Because no one in their right mind would start such a capital intensive business with pricing that looks like this without it. That is why!




This is a chart of Apple’s Gross Margins in the same period. 47.37% on the high end to 36.87% on the low end. This company dictates price, it is not a price “taker” like energy companies and farmers.

Compared to the previous charts, this is a sea of tranquility.

So what about miners? Precious metal miners have no such luxury of massive government support. They are on an island unto themselves. And those miners have to deal with price swings like this?


Much like farming and energy, mining is extremely capital intensive but they have no Farm Bill on their side. No, they are solely at the mercy of the SPECULATOR. The speculator cares not one bit that at $17.50 mining silver is a losing proposition. At $1200 gold only the best gold mines are profitable and there aren’t many of them. They care not that exploration projects will get shelved and production will decline dramatically.

But there is indeed more and that is ZIRP. There is little to no contango in these markets anymore, so the benefit of hedging future production is simply not there (June Gold futures for 2020 are currently $1376). Furthermore, bank financing for future endeavors is not there either for the same reason. A bank will want a significant amount of cushion in the future versus spot for the risk in providing start-up capital.

You now have complete justification for why OPEC exists. Speculators may try to drop the price of oil but for no extended period of time will oil ever stay below the cost of production unless OPEC wants less competition and I for one do not blame them at all. OPEC is only willing to take prices given by the market that suit them, push them too far and they push back.

The counter argument by “free marketers” is the market should decide the price. Why? Does the market decide the price of a new smartphone? How about my cable bill? Have you ever witnessed wild fluctuations in that price? Does the market decide the price of health care? Companies dictate the price based on their cost inputs and competition. They are not price takers.

Until miners “collectively” begin to set the floor on prices, the absurdity that is the precious metal markets will continue. I promise you this. If tomorrow ten of the world’s largest gold miners told the world supply is guaranteed at $1400 and not a penny below, we might put an end to what is nothing short of mindless speculation.

| Digg This Article
 -- Published: Friday, 26 September 2014 | E-Mail  | Print  | Source:

comments powered by Disqus


Increase Text SizeDecrease Text SizeE-mail Link of Current PagePrinter Friendly PageReturn to >> Story

E-mail Page  | Print  | Disclaimer 

© 1995 - 2019 Supports

©, Gold Seek LLC

The content on this site is protected by U.S. and international copyright laws and is the property of and/or the providers of the content under license. By "content" we mean any information, mode of expression, or other materials and services found on This includes editorials, news, our writings, graphics, and any and all other features found on the site. Please contact us for any further information.

Live GoldSeek Visitor Map | Disclaimer


The views contained here may not represent the views of, Gold Seek LLC, its affiliates or advertisers., Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy or completeness of the information (including news, editorials, prices, statistics, analyses and the like) provided through its service. Any copying, reproduction and/or redistribution of any of the documents, data, content or materials contained on or within this website, without the express written consent of, Gold Seek LLC, is strictly prohibited. In no event shall, Gold Seek LLC or its affiliates be liable to any person for any decision made or action taken in reliance upon the information provided herein.