jimmy46

Challenges in Gold Mining

crappy analysis

You don't seem to understand the mining business.

MINES ARE OPERATED ON A "LIFE OF MINE" BASIS.

That means when prices were low they skimmed the high grade ore.
Now prices are high so they are picking at the low grade ore.

You have to process a lot more, probably twice as much, low grade ore to end up with the same number of ounces of gold, compared to high grade ore.

The mines are digging out more rock than ever, but you can't squeeze much gold out of low grade ore.

This also explains why big profits haven't fallen to the bottom line as gold went up so much more than costs.

Gold Futures' Dirty Secret (Part II)

I've been trying to figure out how to buy a futures contract and take physical delivery."""""""

Every commodity has a "delivery point", this is a city where the real item is delivered.
For gold it's probably NYC, do you really want to travel there to pick up your contract.
No commodities are shipped to a house or po box.

Gold Stocks: Too Much Speculative Risk for My Taste

gold stocks are very difficult to analyse,
All mines practice "yield management"

All ore bodies are variable in the amount of metal in a ton of ore.
when prices are low they mine the "rich" ore,
when prices go up they mine the lower grade ore.

The idea is to maximise the value of metal mined
OVER THE LIFE OF THE MINE.

Mining companies tend not to be transparent about
what their plan for the year is,
and I haven't seen an analyst who has the info
or smarts to figure this out.

How Cheap Are Gold Stocks Relative to Bullion?

"""why not then just buy low cost production, like GG, or perhaps AUY? I am not sure why or how their margins are better,""""

Almost all the mining companies play a hocus pocus game,
where they pretend to be a pure miner of one metal.

In reality they dig up a ton of ore and get a bunch
of metals.
Then they sell all but one and use those profits to
offset their costs,
And then the one chosen metal is said to be
practically free.

Take FCX: they claim to be a copper mine, and
they claim their New guinea mine produces
copper for about 5 cents a pound.

BUT, they make a fortune selling gold and silver
from that mine and claim they make zero from
the those metals.

It's just an accounting/public relations game.

How Cheap Are Gold Stocks Relative to Bullion?

"higher costs can be explained either by companies mining a lower grade of ore in the current high price environment in order to preserve their reserves and asset value ""

So does anyone provide info as to the yield management practices of the various gold miners?