Chinese Gold Digger Ping List
Posted on 12/24/2014 5:04:32 PM PST by OneLoyalAmerican
For those wondering where US shale exploration and production companies will be in about 2-3 years, look no further than the gold miners, where the disconnect between undaunted physical demand and relentless paper supply (after rebounding above 0%, GOFO is once again negative through the 3 month mark), and where high production costs and low selling prices, after two years of balance sheet pain, is finally leading many over the cliff. Case in point, Canadian gold-miner San Gold, which had a capitalization of over $1 billion in 2010 just filed for bankruptcy protection. It isn't the first gold-miner to wave the white flag, and it certainly won't be the last.
As the WSJ reported earlier, the Winnipeg-based company said in a statement that it has asked Canadian courts for an initial 30 days protection from its creditors as it seeks to restructure its business.
“San Gold spent half a billion on their assets, and they haven’t had a profitable quarter in six years,” said Greg Gibson, who became CEO in June after a boardroom revolt against the previous management.
The problem, as gold miners (and their long-suffering shareholders know) and as shale companies are about to find out, is that "the sector had overstretched itself during the commodity boom, when the high gold price, and willing investors, saw miners spend heavily on acquisitions and bring new production on line. Some of the sector’s new production was lower grade gold, which is more expensive to mine and became unprofitable as the price of gold fell."
(Excerpt) Read more at zerohedge.com ...
Goldbug ping
Chinese Gold Digger Ping List
Now thats funny!
Interesting theory advanced on the gold price drop by a poster hidflect at ZH:
“There’s been a “mystery” for the last few years as to the gold price. Although the Chinese have been buying tons and tons the price has continuously been declining. It’s occurred to me that the question is this: What do the Chinese do with their gold? Do you think (as many gold bugs assume) that they put the bricks in the corner and go, “Bwahahaha” and simply sit on it? For zero return? I know Chinese. They are incurably short term gamblers. What they are doing is re-loaning the gold via re-hypothecation (legal in the City Of London) out multiple times to the ETF (Electronically traded funds) market. This further lowers the price allowing them to buy even more. Of course, they hold the physical gold with themselves simply issuing scrip as collateral. Either way, they win. It’s a scam of ginormous proportions. If ETF gold collapses due to non-delivery then the physical price will rocket sky-high: they win. If they maintain a low price they continue to accumulate at below market prices. When it bursts, all paper gold holders will be bankrupted.”
It is just a question of time.
Maybe they learned how to gold mine by watching Todd Hoffman...
Goldbug ping.
OneLo,
Gamblers are a kindred lot,
Ninty nine point nine seven three percent of known Gold reserves are in the ground, a bank of a different sort.
Manipulators, inscrutable and otherwise, are the folks whom invariably crash into progress. In olden days, it was called out as capitalism. It works pretty well.
Raben.
If that’s the case, it’s worse than seeing how the sausage is made. It’d be like seeing them made with pure listeria after eating a six pack.
Pardon my lack of knowledge but I have a question. If a goldbug with a large supply of real gold metal is bankrupt, does that mean that he bought his gold on the margin?
“For those wondering where US shale exploration and production companies will be in about 2-3 years, look no further than the gold miners, where the disconnect between undaunted physical demand and relentless paper supply”
Sorry, I don’t see the connection. Oil, the most critical industrial commodity in the world and which is in oversupply right now, has not outrun it’s physical supply by paper trading of factors of hundreds like gold, which is a commodity with minor (though important) industrial uses, and whose total existing amount would fit in 1/3 of the Washington Monument.
Greetings Rapascallion:
Not certain if this answers your question. IMHO, assumption of debt in the name of wealth accumulation is an oxymoron.
If we were to start investing over, instead of pissing our hard earned wealth away scammed by “traditional investments,” and we instead purchased pre-1965 silver coins; we would have retired many years earlier.
Cheers,
OLA
LOL, thought they were talking about those Online games miners
Thie sounds like a case of too much money. It is easy to spend as long as profitablilty can be postponed indefinitely.
Investors should know better. Just watch Shark Tank. Those guys would see through this corporate culture and pass.
Make some money, scale a little, repeat.
Greetings catnipman:
Relatively costly gold mineral extraction efforts will cease operations until the price rises again. Likewise, the relatively costly shale operations must cease production until the crude oil prices rise again.
Over most of my lifetime, the USA imported finished petroleum products to meet consumer demand. Lately, the USA not only net exports crude oil, we export finished petroleum product.
Cheers,
OLA
“Relatively costly gold mineral extraction efforts will cease operations until the price rises again. Likewise, the relatively costly shale operations must cease production until the crude oil prices rise again.”
That may very well be, but that’s not the rational expressed in the statement I took issue with, namely:
“For those wondering where US shale exploration and production companies will be in about 2-3 years, look no further than the gold miners, where the disconnect between undaunted physical demand and relentless paper supply”
And then there’s this:
“Chinese Gold Diggers Drop Their Shovels As Gold Miner Bankruptcies Begin”
Additionally, sound oil companies and sound gold mining companies don’t go bankrupt. They just sit on their reserves until prices go back up.
Overall, the article is BS, at least as far as their opening claim that the rest of what’s in this particular article, which is all about gold, has any relevance to oil.
The old European rule for keeping 5-10% of assets in precious metals is not a bad idea. Nor is the ability to grow much of what you eat and store up for bad times. Owning your home outright is a pretty smart idea too.
The old European rule for keeping 5-10% of assets in precious metals is not a bad idea. Nor is the ability to grow much of what you eat and store up for bad times. Owning your home outright is a pretty smart idea too.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.