What Happens To Gold And Silver Next? Look Out Below?

The Boston Fed Pres, Rosengren, is on record as saying that QE needs to extend for YEARS, and that no tapering should begin any time soon. "Way too early" is the exact phrase.

Why, do we even listen to these people when they say one thing, do another and then trumpet a decision 180 of what they intially tell people?

In fairness to them thats not even possible since thats the combined state and federal tax on a gallon in a lot of places.

"I personally know miners who have been running mines in Nevada for decades. The made money when it was $35/oz and they made money when it was $500/oz. With the huge profits they made in the last 5 years they are now crying that they are going to go broke if they have deal with sub 1k gold. Now, they use the same equipment ( miners are notoriously cheap), the same workers, and have about the same overhead. I've known these guys since the 70s. I asked them point blank if they could make money mining for Gold if it went back down to $500, and the reply was on the order of "well, yeah, but we won't make the huge profits that we have gotten used to". "

They must have been referring to cash costs. I have visited several mines in Nevada, I even went 800 feet underground at Barrick's Cortez mine. I have a masters degree in Economic Geology from UNLV. Cortez is Barrick's crown jewel, their website states;

"Cortez is one of the world's largest and lowest cost gold mines, and the property also has excellent upside exploration potential. In the first half of 2013, the mine produced 760,000 ounces of gold at all-in sustaining costs of $392 per ounce and adjusted operating costs of $179 per ounce."

So one of if not the lowest cost producing mines in the world costs $392 to produce each ounce. That number does not factor in exploration for new mine sites. Obviously a big mining company has no choice but to try and find new resources to replace the ones they have depleted or else the company dies. Exploration is not cheap and these production costs don't factor it in.

Following this thread has been really educational. Thanks to all who's contributed!

I have one question for the better informed:
Wouldn't the looming Oct 17th debt ceiling issue be a catalyst for a significant, if only temporary, jump up in PM prices? No matter how I cut it - whether the debt ceiling is raised, the US gov defaults, or some elaborate compromise made - the result would devalue the US dollar. Since PM prices aren't exactly pegged to the USD, wouldn't PM prices be guaranteed to increase?

I realize it would be close to, if not the definition of, gambling to be playing the market's reaction to one event or another (and I don't plan on buying or selling more than what I usually do either way), but, my meagre mind tells me it's a sure thing.

Any input much appreciated

'

Hence less profitable ones shut down until prices go back up.

Again the smart ones are blowing all their record profits and are saving for rainy days/years of low spot.

Also again they can sell future production which many probably already have locking in their prices.

You also still get recycled gold thats remelted and reused and the gold production from other things.

It will still be mined at 500 an ounce just like it was at 300 something in the 2000s

Thats no different than saying itll be 50k. You cant ever say never unless you run a hedge fund with enough buying power to prevent that

a couple points-

At Basebal and Geo- no matter what the price of silver and gold, they will CONTINUE to mine it. Gold could go to 500 and ABX and other will still look for it. Silver could go to 5 bucks and PAAS will mine it.

IF you don't believe it, then you need to waltz over to the sec.gov web site and start getting familiar with each and every gold and silver miner and understand how they plan on dealing with lower prices and production. However, again, no matter the price of PMs, the miners will continue to dig it up and they cannot do a thing to influence prices.

@poboxw ehhhhh I would exercise caution as in the financial markets, nothing is a sure thing even if you have the probabilities on your side. Just to be clear also- gold and silver are in major downtrends. If this noise about the debt issue was major, we would have seen gold and silver moving in front of the 0ct 17 date, even by several months. That has not been the case with the price action.

Heck, gold lost all its gain from the FOMC minutes on 9/18 with the gap down the other day. So basically we are in this no mans land, a broken asset going forward. So, basing this all on the price action of gold, I don't see gold nor silver rising in front of the oct 17 date. If anything gold now is trapped in this shorter range, bouncing around. how long this range goes on is anyone's guess, but to me, the metals look like a place to stay away from. at this point, I am not interested in selling short nor being a buyer, theres no clear signals to say anything BUT to do NOTHING.

@ poboxw: I remembered back when the financial market crumbling down a few years ago, all the troubles started in the US, and $$$ was being printed at light speed but USD index still hold, even going up.... the last time the debt ceiling discussion happened, the USD index didn't drop much either.

PM are not pegged to USD but it's price in USD, I will doubt PM will jump. Even if there are some uptick, it will be short term.

I do agree with up that PM are still in a down trend (looking at the 52 weeks price chart). how much further down and/or for how long, that's what I want to know.