Pat Shuff

Gold Economics Questionable; Facts Forecast Lower Prices

Finally, regarding gold, the news is of weak rather than
strong production at least in once gold dominant S.
Africa. There, gold production has been waning rather
steadily with production last year falling to the lowest
level since the Boer War all the way back in 1901!
Last year, gold production in S. Africa fell 14%
compared to the year previous, falling to 232 tonnes,
down from 270 tonnes mined and produced in 2007.
Once the dominant gold miner by a huge margin, S.
Africa has now fallen to third behind China as #1 and
the US as #2. China in 2008 produced 288 tonnes of
gold; the US produced 234 tonnes.
S. Africans continued declining production has had a
material effect upon global production totals, as one
might reasonably expect. According to GFMS, gold
production globally fell 3.6% in 2008 compared to 2007,
falling to 2385 tonnes. This is the lowest sum of gold
mined since the mid-90s. Worse for the mining
companies, the cost of production an ounce of gold
has been rising almost relentlessly, and are now close
to $500/ounce, up 22% from that of 2007.
For those who care, last year only four nations had
more gold mining activity than they did in 2007: Russia;
China; Ghana and Mexico, with the Russians
increasing production by approximately 11 tonnes,
while the other three increased production by 8-9
tonnes each. Canada, Australia, S. Africa and
Indonesia saw their mining operations fall, with Canada
producing 8 tonnes less gold; Australia producing 33
fewer tonnes; S. Africa producing 38 tonnes and
Indonesian production falling 52 tonnes.