RE: RE: RE: RE: timmins We do not have to wait till gold hits $1000 per oz to experience a supply shortage. It is already happening, only on a lag. If you look at gold production over the last 10 years or so the yearly supply has remained static at around 2500 tonnes mine supply since 2000. That is despite gold going from $250 to $1900. Since it hit $1900 in 2011 costs to build a mine have been continuing to escalate while the price of gold has been going down. New projects and mine expansions have become less economic. If you combine that with the shutting off of the taps for new investment dollars, there will be a serious decline in mine output this year with even more next year.
In 2011, money was cut off to mining companies who specialized in mining investors. In 2012, only the very best projects were getting financed and at less than optimum terms. When the price of gold crashed recently the taps were completely shut off and an out of service sign was put on the tap.
In 2012 all the mines that were being built got up and running so there was no decrease in production. there was a little decrease coming from closing down unprofitable mines but not much. In 2013, the miners found religion ( or else the directors found new religious CEO's) and started shutting down unprofitable mines. This will decrease overall mine supply. By 2014, the decrease in mine supply will be more noticeable, as a number of these projects got deferred in 2011 and 2012 and are not going to be going into production in 2014. Going further out it will be even worse as exploration budgets have shrunk to maybe 20% of what it was in 2010.
Bob