Quote:
Originally Posted by RummyBoy
Yes - some have lower all in cash costs and some higher but the average cost of getting 1 oz gold out of the ground across the mining industry is around $1200 USD. Of course, it varies but most analysts use this figure in their assumptions:
The Scary Number for Gold Investors: $1,200
You have a bad habit of stating the obvious. I said there was a serious limit to downside risk and that applies if you buy below or around the cost of production. That does not mean there is no risk.
Can gold fall below $1000/oz? Sure it's possible but I doubt it would stay there for very long as it means many mining companies go bust, projects shelved, mines get closed as explained in the above link and that all means lower supply. Prices then have to go back up again. |
As I said, the current gold price affects to the price of mining, as with higher prices it is profitable to mine less productive sites, and thus the mining price goes up with gold prices. It's not fixed. With lower gold prices the mining price will go down (to some point).
Mining companies going bust matters if there is still enough demand for gold, that makes the price to rise again. Although if there is not enough demand, it doesn't matter if there is less production. Less demand requires less production.