The doomsday scenario of gold dropping to $1k per ounce could make half the gold mining industry...

The doomsday scenario of gold dropping to $1k per ounce could make half the gold mining industry worthless, says BAML - not expecting such, but wanting to highlight the vulnerability of high-cost producers like Sibanye (SBGL) as well the attractiveness of less-sensitive Goldcorp (GG), Franco-Nevada (FNV), Royal Gold (RGLD), and Silver Wheaton (SLW). The GDX -1.3% on the session.

Comments (15)
  • Herr Hansa
    , contributor
    Comments (3134) | Send Message
    I suppose if the central banks remove extraordinary stimulus, then a "doomsday" scenario may take place. Some of the large run-up was due to the belief that some currencies would collapse, or a new crisis would topple large developed economies. As that subsided, the price of gold fell, though it appears to have stabilized at the current levels. The other factor in this, which is not mentioned often, is that futures markets required higher margins over the last year for gold futures, making speculation more costly.
    25 Mar 2013, 04:45 PM Reply Like
  • Humble Value Miner
    , contributor
    Comments (491) | Send Message
    with these talks about bank deposits confiscation I won't bet on very low gold price...
    25 Mar 2013, 05:01 PM Reply Like
  • apberusdisvet
    , contributor
    Comments (3110) | Send Message
    At a price of $1000, a majority of miners would cease operations and exploration; this would strongly imply that future production, for perhaps of a decade, would dramatically decline. Remember Econ 101 and the laws of supply and demand. AINT GONNA HAPPEN.
    25 Mar 2013, 05:54 PM Reply Like
  • unclej0
    , contributor
    Comments (84) | Send Message
    Is there any public information on the contracts and prices specified in those contracts by the gold and silver streamers, RGLD and SLW?
    25 Mar 2013, 06:54 PM Reply Like
  • tonyconnolly
    , contributor
    Comments (663) | Send Message
    The doomsday scenario of governments confiscating depositors savings could see a run on banks which case Gold and Silver would be due for massive growth/rally.....This is much more likely, as the precedent has now been set with Cyprus!! The US Ponzi scheme is looking more shaky by the day, dilution of currencies worldwide, mean inflation in now inevitable...SLW and SAND, are the best way to safeguard future purchasing
    25 Mar 2013, 07:05 PM Reply Like
  • Uncle Pie
    , contributor
    Comments (4321) | Send Message
    I read the Merrill report and am a bit confused: the shares of miners are currently about the same as they were during the panic of 2008, at which time the gold price was in the $800-$900 area. According to Merrill's report, quite a few of them would be worthless at that price, yet most were selling at about the same price they are today.
    25 Mar 2013, 09:25 PM Reply Like
  • Herr Hansa
    , contributor
    Comments (3134) | Send Message
    It's a good indication that the talented analysts at Merrill Lynch have already left the company.
    25 Mar 2013, 09:28 PM Reply Like
  • Philip Marlowe
    , contributor
    Comments (1625) | Send Message
    They may be the same companies, but they are not mining the same gold. Every new ounce of gold is more expensive to get out of the ground as the best deposits are mined out. Right now mining companies have to sift through tons of dirt to get grams of gold. This is all very expensive and requires ever higher investments in equipment and fuel.
    25 Mar 2013, 11:09 PM Reply Like
    , contributor
    Comments (10809) | Send Message
    Uncle Pie - in addition to Philip's comment, all other costs have been increasing as well. Witness the cost of labor in South African mines.
    26 Mar 2013, 06:29 PM Reply Like
  • The EconomicJoker
    , contributor
    Comments (958) | Send Message
    Anything under 1600 is bought with fury. This stupid article needs to be removed. Come on, SA.. Letting agenda through now?
    25 Mar 2013, 09:42 PM Reply Like
  • bones33
    , contributor
    Comments (288) | Send Message
    Another factor to consider is the big banks manipulation of metal prices as they were already caught doing with interest rates(LIBOR)
    The CFTC is looking at issues including whether the setting of prices for gold—and the smaller silver market—is transparent. No formal investigation has been opened, the people said.


    The inquiry comes as regulators expand their review of global financial benchmarks in the wake of an interest-rate rigging scandal. Three large banks have agreed to pay a total of $2.5 billion in penalties over alleged manipulation of the London interbank offered rate, or Libor, and more than a dozen financial firms are still under investigation.
    25 Mar 2013, 09:55 PM Reply Like
  • bones33
    , contributor
    Comments (288) | Send Message
    "The idea that pervasive manipulation, or attempted manipulation [of interest rates], is so widespread should make us all query the veracity of the other key marks," said CFTC Commissioner Bart Chilton at a Feb. 26 roundtable in Washington on financial benchmarks. "What about energy, swaps, the gold and silver fixes in London and the whole litany of 'bors'?" he said, referring to Libor, Euribor and other benchmarks.
    25 Mar 2013, 09:57 PM Reply Like
  • Uphill_Skier
    , contributor
    Comments (116) | Send Message
    I'm with EJ above. This article is ridiculous. More likely gold will surge above $2000 this year (2013) or $2500 in 2014 than that it will EVER again dip to $1400, let alone $1000.


    there are bank runs going on right now in Europe, it's not hypothetical !
    26 Mar 2013, 05:36 AM Reply Like
  • bones33
    , contributor
    Comments (288) | Send Message
    we shall see.i hope your right uphillskier!
    26 Mar 2013, 08:47 PM Reply Like
  • peace8
    , contributor
    Comments (6) | Send Message
    This article is ridiculous. I think some very young colleagues think that the price of a commodity is being determined just between Wall Street and London banks. There are costs, demand aspects, supply problems, profit expectations of gold miners. Most of those gold mining companies have huge positive cash balances and nobody has to sell gold at "any" price. Demand vs. supply!
    30 Mar 2013, 02:46 PM Reply Like
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