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misteroman
Administrator
USA
2565 Posts |
 Posted - 05/21/2008 : 00:34:32
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He was saying he heard that they are finding it harder and harder to find gold in the ground and that the supply is just no where to be found.
Anyone else heard this??
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Buying CU cents!!!! Paying 1.2 unlimited amounts wanted. Can pick up if near Ohio area. |
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starwarsgeek171
Penny Hoarding Member
USA
651 Posts |
Posted - 05/21/2008 : 13:33:21
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I posted this about a week ago:
CEO Kevin McArthur of GoldCorp appearing on CNBC's Closing Bell just said that he sees a "trainwreck" coming in terms of the future supply-side of gold.
His arguments clearly support your neighbor's observation.
IMNSHO, the situation is exactly that of peak oil. Half of it is probably still there, but it's going to be much more difficult and expensive to get at it.
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misteroman
Administrator
USA
2565 Posts |
Posted - 05/21/2008 : 13:40:01
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| lol what about silver? |
Buying CU cents!!!! Paying 1.2 unlimited amounts wanted. Can pick up if near Ohio area. |
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tmaring
Penny Collector Member
USA
302 Posts |
Posted - 05/21/2008 : 13:43:02
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I disagree with respect to gold. There are tens of millions of ounces of drilled reserves sitting in the ground in Nevada alone, patiently being mined. There is no shortage of new gold and probably never will be. Price will be a function of the energy content of the metal (in other words... how much energy does it take to recover the metal from the ground).
Silver is another story entirely. |
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starwarsgeek171
Penny Hoarding Member
USA
651 Posts |
Posted - 05/21/2008 : 17:57:38
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tmaring, would you suggest platinum over gold for the long-haul?
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Saul Mine
Penny Collector Member
USA
343 Posts |
Posted - 05/21/2008 : 23:20:33
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| Mining is a very restricted business. It is subject to the whims of politicians, environmentalists, energy shortages, labor disputes, and lots of others. A big factor is permits: it takes years to get permission to open a mine even after it is found. That is why reserves stay in the ground. I heard a report that mines in Nevada have discovered vast deposits of gold, but because it is very fine and very deep they have no interest in trying to get it out. |
A penny sorted is a penny earned!
Please use tinyurl.com to post links. Long links make posts hard to read. |
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tmaring
Penny Collector Member
USA
302 Posts |
Posted - 05/22/2008 : 08:00:38
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I don't know enough about the PI (platinum/iridium) group metals market to make a call on that one. It seems overpriced to me, but they have important industrial uses which gold does not.
quote:
Originally posted by Saul Mine
... it takes years to get permission to open a mine even after it is found. That is why reserves stay in the ground. I heard a report that mines in Nevada have discovered vast deposits of gold, but because it is very fine and very deep they have no interest in trying to get it out.
Yes that's about right. Five to ten years is what they generally say, tending towards the long end lately. Even if you have a friendly BLM caseworker their hands are tied by a "process" that must be followed, and every step takes 90 days, or 120 days, and northern Nevada gets pretty brutal in winter, so there's a seasonality to doing field work there. The really big deposits are up on the Carlin Trend in Northeast Nevada, and in the Jerritt Canyon district north of there. The gold is very fine... submicron size particle (invisible to the hand lens) disseminated in a black shaley limestone host rock called the Hanson Creek formation. Above the host rock is a near-horizontal thrust fault which thrust OLDER rocks of the Snow Canyon Formation and McAfee Quartzite over the top of the Hanson Creek. This thrust fault is not perfectly horizontal of course, so in some places it "windows" to the surface, and in other places it is at some depth.
The gold in these rocks is so fine that where the ore is eroded it does NOT form placer deposits in streams, because the gold particles are small enough to be suspended in water and just wash away.
Saul is correct that there are vast deposits known. The calculations of what makes sense economically are primarily concerned with grade and depth. Obviously a high grade shallow deposit that can be accessed by open pit methods is the most economical. They can mine and process shallow deposits down to a grade of about 0.4 grams per ton. If the deposits run deep they must be accessed underground, which means higher costs. You'd need at least 1.0 gram per ton to mine underground. And this Hanson Creek formation is notoriously poor structural material... it does NOT make a good ceiling. So the mining engineers have to go to great lengths to keep the miners alive... all at extra cost of course.
Published recovery costs in the district range from $250 per ounce to $570 per ounce. As you can see... the high range only makes sense while gold is high. If gold stays high and appears that it will continue, some efforts may be made to go after the deeper and lower grades.
So yes... many of these vast deposits sit in the ground patiently awaiting mining. What may be particularly interesting to this group is that this gold is bought and sold NOW!!! It does not have to be mined and milled to be on the market! That is... you can buy a deposit in the ground based on a discount from the value the gold would have as bullion. For instance... let's say there is a deposit that has been extensively drilled and a resource estimate shows a probable resource of five million ounces of gold. That is a nice size deposit... not huge but very respectable. If the gold were as bullion in your vault right now it would have a value of something like four billion dollars. If you had some capital and wanted to start a mining company, you could buy into this deposit with cash. You would go through extensive calculations and consultations to deptermine recovery and capital costs etc... but in the end you'd pay something like a couple hundred million cash for the gold in the ground... a few percent of its ultimate value. Then it would be up to you to pull it out of the ground to cash in your profit... OR... you could wait for gold to go up and/or do some more development work on the project and SELL IT AGAIN for a profit, without ever mining any gold. THIS IS DONE ALL THE TIME!!! Fortunes are made and lost constantly over gold that no pick has ever dug!
It's actually quite fascinating. As you might imagine... scams are quite common. You can get burned... badly!
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Talking to a neighbor.....
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