Miners will need $3,000 gold price to be profitable, WGC head says

[Unobtanium]

I found this interesting because I have never seen numbers before that describe what gold price/oz that the miners need to break even.

This raises the question then, how did they make a profit between 1982-2005 when gold was < 450/oz? Surely mining costs have not gone up three-fold since 2005? If not, then something is wrong with this picture.

http://www.reuters.com/article/2012/...8GF0AR20120515

Miners will need $3,000 gold price to be profitable, WGC head says
Submitted by cpowell on Tue, 2012-05-15 13:42. Section: Daily Dispatches
From Reuters
Monday, May 14, 2012

Sharp increases in mining costs mean gold will need to reach $3,000 an ounce in five years for the industry to stay profitable, World Gold Council chief executive Aram Shishmanian said on Monday.

Miners currently needed a gold price of $1,300 to survive, Shishmanian said, but faced steep rises in mining costs, along with the cost of dividends and host nation taxes.

"If this continues for the next five years the gold price needs to be at least $3,000 just to stay in the business," he said. However, he was optimistic sustained demand would drive prices higher over the long term.

Spot gold fell to a 4 1/2-month low of $1,556.5 an ounce on Monday on concerns over the European debt crisis. Normally a refuge for investors in times of economic turmoil, gold has recently traded in line with risk assets like base metals and stocks.

Future demand would come from emerging markets, central banks and investors, Shishmanian said, noting that China and India now represent 55 percent of the world gold market.

"Emerging markets are going to hold increasing amounts of gold reserves," Shishmanian said. "Holding billions of dollars doesn't help them. The alternative potentially is gold."

Exchange traded funds backed by gold currently hold $120 billion, he said.

"This is the tip of the iceberg," he said. "U.S. pension funds do not hold substantial amounts of gold but we see that changing over the next 20 years."

[ancona]

Good stuff there Unobtanium. What a lot of folks do not realize is that gold mines no longer have large veins of pure gold sitting in quartz veins waiting to be exploited. Barring some random discovery of some unknown gold reserve/vein, the quality of gold mines will continue to degrade. As it is, most gold mines are graded in grams of gold recovered per ton of material removed for processing. Again, that's GRAMS of gold per ton. Think about the energy requirements for extraction of this gold. It is absolutely astounding.

In South Africa, some of the largest mines are now miles and miles deep, necessitating incredible energy output to get an ounce of marketable gold.

This will certainly be something to monitor.

[Unobtanium]

Ah yes, I remember seeing a video recently showing that the grams of extracted gold per ton of material was on a decreasing spiral.

I also found this 15-year-old statistic at:
http://www.galmarley.com/framesets/f...tials_faqs.htm

The average production cost of the world's biggest producer - South Africa - is about $238 per troy ounce. 1997 industry estimates by the Federal Reserve Board suggested an average production cost worldwide of $300 per ounce.

[Unobtanium]

Here are some historic charts for gold mining ore grades for the past few decades:

From http://www.kitco.com/ind/Resopp/20120504.html




From http://articles.businessinsider.com/...ines-ore-grade

[Unobtanium]

OK, now let's project the above curve out another decade or so. The price pressure on gold (and silver) is going to be tremendous well BEFORE this line gets to zero grams/ton in 2025-2030.

This, I believe, will drive the increase of the price of gold at a higher rate than inflation, being simply exacerbated by the QE printing of money. In other words, you will be able to get several high-end men's suits for an oz of gold in the very near future.

IMHO, the projections of gold at $3000, $5000, $10000+/oz in the near future now seem even more real to me; and this being possible even without a Mad Max, SHTF, all-hell-breaks-loose world.

[ancona]

Tou know, there are thousands of square miles of land that is high in ore but off limits to prospecting. This is not fertile crorn belt stuff either, it's forbidding mountainous desert shit. The Government has seen fit to stop all prospecting in a lot of areas. I don't know if this is calculated or shat, but it is at the least, maddening.

[bushi]

...we are clearly at (or post) peak everything - gold is but another natural resource, that is FINITE, which inevitably conflicts with our "infinite growth required and built in" economic/monetary theories and policies.

same with copper, silver, etc.

I wouldn't be surprised AT ALL to learn that the costs of manufacturing something elementary have risen two-threefold since 15 years ago. That we as the people do not experience such a drastic inflation in our everyday shopping, is mainly due to continuously lowering the quality of the produce we buy everyday. But try to compare the prices of STUFF, hardcore STUFF, that cannot be cheapened (i.e.: grade steel, grade plywood, etc. ), because it is what it is, and no amount of tinkering can make it a "cheaper mouse trap" - it's price has risen dramatically. Even things like stupid minced meat - however rising in prices very high - if someone 15 years ago sold me a minced "meat", which "Ingredients" section on the packaging says "Meat content: 60%", He would go out of business immediately. Today - it is a norm in supermarkets - I never buy brands anymore, I read the "ingredients" sections only. And this is only what they let me KNOW about their ingredients, I am not kidding myself - still, better than not reading them.

My point is, that industries, who use base, hardcore, elementary stuff as their input (mining seems to be one of them), they simply cannot possibly tint their input "meat" with soy, pink slime and fuck knows what else - they need to use grade steel, grade plywood (...). So their costs MUST rise, appropriately.

EDIT: Unobtanium: that falling grade chart, answers very directly your original question about the costs of mining - if the grade was ~4 in '90ties, and it is ~1 now - they have to mince 4 times as much rock, to get the same amount of metal produced. That is costly, I'd say - energy hungry, equipment eating, chemicals, etc..... At least four times increase of base costs, and it does not take into account rising prices of "stuff" they use, to mince through all that rock... Phew, one have to mince >30tons of rocks for one Eagle coin, that tells us something about the resource depletion...

[Unobtanium]

Here is a pretty good interview with the USGS Mineral Commodities Specialist Micheal George about gold mining.

http://news.goldseek.com/GoldSeek/1337842431.php

Will 'Peak Gold' Exploration Continue to Grow?

-- Posted Thursday, 24 May 2012
Source: GoldSeek.com

Global gold production is at an all-time high, according to a new report from the U.S. Geological Survey. In this exclusive interview with The Gold Report, the Survey's Mineral Commodities Specialist Micheal George pinpoints where the gold is coming from and what trends can be expected in the coming years.

The Gold Report: The U.S. Geological Survey's (USGS') Mineral Commodity Summaries (MCS) 2012 describes world mine production and reserves by country. What are the biggest changes from last year?

Micheal George: There weren't a lot of big changes other than replacing reserves that were mined during the previous year. The largest changes were Australia increasing reserves by 100 tons (t) and Canada decreasing reserves by 70 t. The reason behind Canada's decrease was the closure of mines due to exhausting mineable reserves. Australia's increase was due to adding new mines to its potentially active mine list.

Annual world mine production increased approximately 5% in 2011. It was the third year in a row of an increase in production and marked an all-time high for gold produced since recorded history. Compared to the recent low in 2008, production is up about 19% or 440 t. So it's recovered quite a bit.

TGR: What are the reasons for higher gold production? Is it simply because the gold price was higher?

MG: The gold price was higher, so more mines are processing, and they're pushing out more gold. A lot of it is coming from China right now. Quite a bit of gold is coming from other countries as well.

TGR: Are mining companies replacing reserves through exploration or acquisition?

MG: Both. Nowadays, a lot of the additional reserves have been coming from exploration, mainly around the deposits that are currently being mined.

TGR: How does the USGS estimate reserves for this report?

MG: Reserve estimates are calculated by the government in each country in the report. For example, the Australian government or Canadian government does research and revises reserve numbers and that is what we use in the report. The USGS also researches public company reserve reporting. Sometimes we use company published reserves if we know all of the companies in a country. For example in Papua New Guinea, all the mining companies are publicly traded, so they all have to report their reserves.

TGR: How about production and reserve numbers from China?

MG: The production numbers are straight from the Chinese government. I don't think it has updated countrywide reserves in the last couple of years. If it has, we don't have a new number from it.

TGR: Are you saying the change in gold price and increase in production over the last year hasn't materially changed the reported gold reserves in China?

MG: In our publication, yes, China's reserves have not changed too much mainly because we don't have any new reports out that have updated reserves or that Chinese miners have just basically replaced what they've mined out in recent years. Reserves are a moving target. It's constantly changing based on price, based on technology, based on a whole host of factors.

TGR: At these prices, are we running out of gold? In the energy sector, we hear about "peak oil." We don't really hear about "peak gold." Is there such a thing?

MG: "Peak gold" doesn't really work as a theory. There have been several historical "peaks" in gold production. There was a peak in U.S. gold prior to World War II in 1938 at 161 t. Production then dropped during the war because of a shift to wartime materials. Gold production trended downward until the 1970s because of low gold prices. After a sudden increase in gold prices in the 1980s, a rush to find new gold deposits led to the discovery of additional deposits in the Carlin trend area in Nevada. The Carlin mine had been operating since the 1960s, mining these massive, low-grade deposits. At that time, USGS geologists were out there and investigating these deposits. The U.S. Bureau of Mines helped develop the process of cyanide heap leaching, which, in turn, allowed the low-grade deposits to be economically developed. That caused a substantial increase in U.S. gold production. By 1998, we hit another high of U.S. gold production at 366 t. But at the time, the price of gold was at a historical low. By 2002, the price started to increase and has steadily increased through today. The persistent high gold price has led to increased production in 2010 and 2011, with new mines coming on-line and existing mines expanding operations. Continued exploration spurred by the high gold price has led to numerous discoveries, some of which have quite a bit of reserves, such as on the Cortez trend. There is a mine that just started up a couple of years ago that has a huge reserve right now. The world follows a similar pattern as the U.S., with multiple peaks in production over time.

In this way, gold is unlike oil, which is a consumed material. Gold is unique in that it's an investment, not merely a commodity. Because of its value, gold is rarely ever consumed in a traditional sense. It's nearly indestructible, and it's nearly completely recycled. I think the only gold use I found that isn't recycled is in spacecrafts. This means that an increase in demand may not be solely met by new supply. It could be met by scrap supply. It also takes decades for gold production to respond to price movements because of the time lag it takes from deposit discovery to production. It could take decades for a mine to start up. Also, when gold prices are low, production generally plateaus and may decline, owing to a lower rate of return on investment. At the same time, exploration for new deposits is minimal because companies need to reduce their expenses and they don't go looking for new deposits. That's what happened in the 1990s and early 2000s. There were historically low levels of exploration, so we had this time lag of about 10 years. Now, we're seeing the gold price affecting production and causing production to go up where we didn't see that a couple of years ago.

TGR: Is there a similar situation on the supply side where it takes decades or a long period of time to create sustained demand? Perhaps demand in China is an example?

MG: Not necessarily because demand can really bounce around quite a bit. You have a huge pool of recycled material sitting out there. So if the price gets high enough, people are willing to give up their gold.

TGR: Comparing gold to oil again, one meaning of "peak oil" is that we are running out of cheap and easily obtained oil. Now there's a lot of oil, but it's expensive to get to. Is there a similar situation for gold? As long as the price is high, people are going to look for it, but is it becoming more and more expensive to find, mine and process?

MG: Only when you compare dollars to dollars. Yes, it is more expensive to look for gold now than it was previously, but not significantly. If you put inflation factors on it, exploration and production costs have not risen nearly as much as for oil. However, when the price of gold goes up dramatically, companies will mine lower grade deposits. So if the gold price drops significantly, then ore grade would actually go up. Right now, miners evaluate deposits based on where the deposit ends or where the pit wall is going to be. The mine gets bigger as the price goes up, and the mine gets smaller as the price goes down. With a lower gold price, they are going after higher-grade deposits. But with a high price, they are going after as much ore as they can produce that is profitable.

TGR: You also mentioned that as the price of gold goes up, spending on gold exploration goes up. The 2010 Minerals Yearbook just came out. It says that gold was the primary mineral exploration target with more than 50% of the world's non-ferrous exploration budget of $5.4 billion, 59% more than in 2009. Do you see that trend continuing?

MG: Yes. That trend has continued from 2011. It has gone up again, and gold is still more than 50% of the targeted materials.

TGR: What is the next most popular mineral for exploration?

MG: Probably copper. It gets a little fuzzy because miners may be going after copper porphyry, but copper porphyry also has gold in it. But it's probably copper.

TGR: Is the nature of the mining industry still cyclical?

MG: Yes, it's just how mining is. There are boom and bust periods. The successful companies are able to spread out their risks more than others. They're making huge profits right now to make up for huge losses coming up. Mining is one of the few industries where the companies know they're going to have a big loss coming up eventually. The industry is cyclical. Gold prices go up, gold prices come down. In mining, they have to balance out the really good years with the really bad years. Hopefully the gains and losses offset and the companies make a profit over 30 or 40 years.

TGR: A large component of domestic gold supply listed in the MCS was imports of ore and concentrates from Mexico. How do those fit into the market?

MG: That is cross-border refining. Mexico doesn't have enough refining capacity to refine its own ore so it is sent across the border, sometimes by the same company owning both properties in the U.S. and in Mexico. Ore is sent to the U.S. to be further refined into either dore or bullion to be sold on the market. Sometimes, refined ore will be shipped to another country, say, Switzerland, where it's further refined into bullion, which enters into the London market to be sold.

TGR: Let's dig a little more into the recycling market. Last year, the U.S. had 225 t of gold recycled. That was approximately equal to the domestic mine supply.

MG: Yes. Regarding scrap, the price is driving people to give up their gold. Television commercials for buying gold air every day, and that's essentially what's driving the market. People are parting with their gold jewelry that they don't want anymore.

TGR: But for every buyer, there's a seller. So who's driving the demand side?

MG: Investment is driving the demand side, especially worldwide investors. Across the board, even in the U.S., people are investing in gold as a safe haven. They don't want to invest in the dollar or the euro because they aren't doing so well. So they find something else that is gaining value and that gives them a good rate of return but also has the liquidity in that they can sell it anytime, anywhere. Even if the world economy collapsed, gold would be valued by somebody somewhere.

TGR: Is this individual investors or central banks or both?

MG: Both. Central banks have historically been sellers on the market until 2010. Now they are buyers. The sellers are traditionally the European banks, and now we're seeing buyers from non-European banks.

TGR: What about institutional investors?

MG: Oh, yes, they're buying gold, too. Everyone from Joe Public to the Russian Central Bank and Chinese Central Bank is buying gold. Everyone is buying gold for investment.

TGR: We hear a lot about emerging geographies for gold exploration and mining. What about Africa? What are the largest producing countries in Africa?

MG: Africa as a continent is one of the largest gold producers, and it has more reserves than most of the other areas because it's underdeveloped right now. I just got some new numbers that show this year the third largest producer in Africa is Tanzania. Mali, which is now number four, went up, but Tanzania went up by more. Their numbers are pretty close to each other, so they probably will flop back and forth. They both have several large mines owned by multinational companies, so they're pretty stable owners. However, they won't catch up to South Africa any time soon.

TGR: South Africa is still number one?

MG: South Africa is number one, but it's falling just because of its age. Its mines are so much older, so much deeper and so much more complex. It's also been having labor issues. Across the board, costs have gone up. Everything is underground, and there are some mines that are two miles underground.

TGR: What country is number two in Africa?

MG: Number two is Ghana. Ghana is almost double Tanzania and Mali. South Africa is another 100 t above Ghana. So there's still room. No one is going to catch South Africa right away. It will take years.

TGR: And how is the U.S. doing?

MG: U.S. production is increasing. It increased again last year a little bit.

TGR: According to your report, annual production is approximately 230 t?

MG: It's been about that for a while. Some of the larger mines are aging so they're showing some drops in production. It can be hard to get new mines started in the U.S. The U.S. has several world-class deposits that are either in lawsuits or just having difficulties getting permitted.

There is a lot of gold up in Alaska that is untouched. There are a lot of areas in Alaska that are untouched for exploration also. Nevada still has quite a few deposits that are not developed that can come on-line soon. As I said, Cortez came on a couple of years ago, and now it's a huge mine.

TGR: Are there other areas in the U.S. that might contribute to gold production in the future? North Carolina has seen some activity during this cycle.

MG: North Carolina is an interesting area. It's all on private land. Mining companies own the land, so they don't have to worry about permitting like out West, where they have to permit through the Bureau of Land Management or the Bureau of Reclamation. They just have to get their permits through state agencies. It's a little easier that way. The deposits are different, the gold is locked up in quartz and greenschist, which is a little harder material to work with, but it can produce gold. There is one project that's far ahead of everybody else, and then there are a couple that are still in the early phases.

TGR: Can you explain what your group at the USGS does? Do you promote mineral development in the U.S.?

MG: We are like a warehouse of information. A company could call me up and ask questions about what has happened in the past and why the price has gone up in the last few years. It could ask me questions, but we don't do anything to directly promote mineral development.

We produce the MCS, which gives a quick glance at what's going on today in the gold industry. The larger, more detailed Yearbook gives more of an overview of what happened during that year so you can see where development and production took place. It provides insight into why production was flat per se or why exploration has gone up. It gives a good basis to understand the industry during the past year.

TGR: Thank you for your insights.

The most up-to-date documents referenced in this interview can be accessed at http://minerals.usgs.gov/minerals/pu...old/index.html .

[Unobtanium]

More about gold reserves, from:
minerals.usgs.gov/minerals/pubs/mcs/2012/mcs2012.pdf

Reserve Base.
That part of an identified resource that
meets specified minimum physical and chemical
criteria related to current mining and production
practices, including those for grade, quality,
thickness, and depth.

The reserve base is the inplace
demonstrated (measured plus indicated)
resource from which reserves are estimated.

It may encompass those parts of the resources that have a
reasonable potential for becoming economically
available within planning horizons beyond those that
assume proven technology and current economics.

The reserve base includes those resources that are
currently economic (reserves), marginally economic
(marginal reserves), and some of those that are
currently subeconomic (subeconomic resources).

The term “geologic reserve” has been applied by others
generally to the reserve-base category, but it also
may include the inferred-reserve-base category; it is
not a part of this classification system.


Inferred Reserve Base.
The in-place part of an identified resource from which inferred reserves are
estimated. Quantitative estimates are based largely
on knowledge of the geologic character of a deposit
and for which there may be no samples or
measurements.

The estimates are based on an
assumed continuity beyond the reserve base, for
which there is geologic evidence.

Reserves.
That part of the reserve base which could
be economically extracted or produced at the time of
determination. The term reserves need not signify
that extraction facilities are in place and operative.
Reserves include only recoverable materials; thus,
terms such as “extractable reserves” and
“recoverable reserves” are redundant and are not a
part of this classification system.

Marginal Reserves.
That part of the reserve base
which, at the time of determination, borders on being
economically producible. Its essential characteristic is
economic uncertainty. Included are resources that
would be producible, given postulated changes in
economic or technological factors.

Economic.
This term implies that profitable extraction
or production under defined investment assumptions
has been established, analytically demonstrated, or
assumed with reasonable certainty.

Subeconomic Resources.
The part of identified
resources that does not meet the economic criteria of
reserves and marginal reserves.

[Unobtanium]

http://www.hyperinflation-us.com/wor...ly_mining.html

In-Ground Low Grade Ore Supply is Staggering
.......USGS estimates that of all the gold in the earth's crust, 99.9998% is too dispersed to have ever been profitably mined, gold prices and extraction costs being what they've been thus far throughout history.

Thus, the great majority of all the gold ever mined has so far been confined to the most concentrated .0002% of the earth's gold. (The exception is roughly 15% of gold production which is recovered as a byproduct of other minerals' mining.)

Of course if the price of gold continues to rise to say $2,000 and beyond, miners will not be confined to just .0002% of the crustal gold. Lower grades of ore becoming profitable for the very first time might raise their opportunity, very conservatively, to say, .0005%.

Even such a tiny change would suggest potentially increasing the miners' in-ground gold Reserve Base by a stunning additional 150%. That works out to an extra 150,000 tons--an amount nearly equal to all of the gold ever mined.


In short, as the price of gold continues to reach new records, some portion of that other 99.9998% becomes increasingly available to miners.

Thus, there is more than ample gold in the ground to keep a lid on the price of gold in the long term, especially when you consider that gold's price rising in and of itself can transform already located poor grade worthless ore into profitable Reserves.

Recall that all the gold ever mined would fit in a cube roughly 65 feet to a side. Many, many, many times that amount remain in the earth's crust, and if humans want more badly enough, we can get it.

[ADK]

Thanks for the interesting article, Unobtainum!

I've wondered, for quite a while, what the cost of production was for silver. I've just never got around to researching it.

Other than peak PMs, my curiosity is now piqued.

ADK

[DoChenRollingBearing]

Great thread guys!

[Unobtanium]

Great thread guys!

Thanks for the interesting article, Unobtainum!

I've wondered, for quite a while, what the cost of production was for silver. I've just never got around to researching it.

Other than peak PMs, my curiosity is now piqued.

ADK

Will keep adding useful mining snippets to this thread as I come across them....

[bushi]

(...)Even such a tiny change would suggest potentially increasing the miners' in-ground gold Reserve Base by a stunning additional 150%. That works out to an extra 150,000 tons--an amount nearly equal to all of the gold ever mined.

In short, as the price of gold continues to reach new records, some portion of that other 99.9998% becomes increasingly available to miners.

Thus, there is more than ample gold in the ground to keep a lid on the price of gold in the long term, especially when you consider that gold's price rising in and of itself can transform already located poor grade worthless ore into profitable Reserves.

Recall that all the gold ever mined would fit in a cube roughly 65 feet to a side. Many, many, many times that amount remain in the earth's crust, and if humans want more badly enough, we can get it.

It is both true, and untrue. True, increasing price of commodities, make the deposits, that would be otherwise economically unobtainable, all of the sudden, reasonable to explore. IF we consider gold price rising alone, that is. Same mechanism works here for tar sands, deep water drilling etc.

BUT....
with one caveat. To tap to these lower & lower grade resources, we need to do two things:
first: literally, destroy whole counties, to claw ever-decreasing fractions of metals, from ever-increasing mountains of.... mountains? I don't have time now to google the images of copper mines, which are now huge holes in the ground, where the mountain used to be, but they look similar to that one:
http://www.elmhurst.edu/~chm/vchembook/330copper.html

second: with that known, how do you think it is, in terms of ENERGY required, to mince and further process, a fecking mountain? IF the oil is going north as it is, for the same reason (cheap & easy to get resource depletion) - all of the sudden, even the CURRENTLY economically viable deposits, might become unprofitable. (specifically: how ever-increasing oil price will affect the profitability/sustainability of the mining operations, in both current-grade deposits, let alone these supposedly "vast" lower-grade ones?). Like you said: miners need $1300/OZ, to cover their costs. That is with TODAY'S energy prices, right? But what will be the price per OZ required, if energy price doubled? Why people make the assumption, that "gold price will continue to rise, making worse-grade deposits profitable", without coming to quite a symmetrical conclusion, that oil (by extension: energy) price, will follow at same or even faster pace (increasing developing world competition for their bite of the ever-shrinking cake of cheap energy), making these lower-grade ores non-economical back again?

(...)and if humans want more badly enough, we can get it.
ahh, typical economic arrogance, that assumes our greed and lust will overcome physics, somehow, just because we want something. I think that all economists in the world, must have been very spoiled children, who grew up thinking that the whole world will make an exception to the laws of physics and even some algebra, just because they want it so bad.

In terms of depleting easy-obtainable oil, there is simple measure, when the party stops. Marginal barrel, which is when we spend a barrel of energy equivalent, to get one barrel off the ground and to the pump. (Think about it as all of the energy that has been put in place over the lifetime of the derrick - starting with... getting the ore off the ground, process it to make steel, transport, assemble&maintain that steel into an oil derrick, etc, etc.). We are at the collision course for these two graphs to cross . I mean, we spent more & more energy, to get new oil fields online. And these new oil fields, are not even enough, to offsert the decline in the cheap & easy ones. And we do that stuff in ever harsher environments (Deep Water Horizon, anyone?). We went from these:
http://mercurymasterpunk.ca/images/oil_derrick.jpg
to these
http://www.commondreams.org/headlines01/0320-02.htm
...and it takes A LOT of embedded energy to make and use them. Not to mention the risks...

I don't know how to make the analogy of "marginal barrel" for gold, but these "theoretical abundance" mind-exercises fall short of taking even the parallel effects to their own assumptions into consideration, let alone other real-world factors.

Amusingly (not!), our economic policies/frameworks, were designed in times, when the capital scarcity was the main problem - there were always new resources available, if we could manage to get together enough capital to work, to get them out of the ground. Thus, all the scholars in the field of economy, all the Bernankes, Draghis and others, operate under that false assumption, that it is, and always will be the case (while it is even an algebraic impossibility, not even a real-world one). While it clearly is not, anymore.

[DCFusor]

Yup, we've pretty much "high-graded" everything at this point, only minor exceptions exist. New tech might overcome some of that for some things, but not for most.

Gold from ocean water is *almost* worth it and will be if prices rise enough, but that's more or less the same situation. You take some out, and at some point the concentration of what's left goes down. That is, unless you can store whole oceans of already processed seawater someplace instead of having to put it back to dilute whats left. Good luck with that!

[Unobtanium]

Thanks bushi and DC. You comments make the extrapolated curve in post #5 and even more curious and interesting curve.

[bushi]

Yeah, in terms of supply/demand, I think that if traders had ANY idea about what is going on in the real world, and that unlike technical analysis, charts, electrons, derivatives casino, "money for nothing" creation and talking heads world, there are very hard LIMITS of what we could possibly get from Earth - they should already killing each other over what' s left in non-renewable commodities. See what Chinese are doing...

Gold is but one of them, but similar charts can be drawn for almost anything today.

What is scary, and puts us on a direct crash course, is that our economic/monetary systems, (as of today), they require year-on-year exponential growth of economy - just to prevent them from collapsing. So, to be compatible with even TODAY's resource extraction rates, we would need technology to provide reverse-exponential upgrades in material usage, year on year. Can you imagine that each year, the stuff that we manufacture & consume, uses x% less and less base material & energy to manufacture (where x is equal to real GDP growth, to stay flat with base resource usage)? I mean, yes, it happens, we are getting more and more crap products for our money (heuristics in CPI, anyone? ), but hey, we simply cannot possibly keep the pace with consumption growth by cheapening the designs, at ever-increasing pace. And it wouldn't even reduce resource usage, only keep it at today's levels. (Example: let's assume you are world-only chair maker, and you HAVE to increase your production by x% yearly, to sustain world's economy, and you can only use 100 trees a year (=flat resource usage). So, you would need to use less and less timber per chair every year, and that would have to go DOWN exponentially, as reverse to your yearly production growth. Pretty soon, your timber content per chair would be close to zero. That is simply impossible in the real world.

Space mining... The only viable option, going forward? But is it possible at all? And the energy requirements for that to happened... My gosh.

[benjamen]

Yeah, in terms of supply/demand, I think that if traders had ANY idea about what is going on in the real world, and that unlike technical analysis, charts, electrons, derivatives casino, "money for nothing" creation and talking heads world, there are very hard LIMITS of what we could possibly get from Earth - they should already killing each other over what' s left in non-renewable commodities. See what Chinese are doing...

Gold is but one of them, but similar charts can be drawn for almost anything today.

What is scary, and puts us on a direct crash course, is that our economic/monetary systems, (as of today), they require year-on-year exponential growth of economy - just to prevent them from collapsing. So, to be compatible with even TODAY's resource extraction rates, we would need technology to provide reverse-exponential upgrades in material usage, year on year. Can you imagine that each year, the stuff that we manufacture & consume, uses x% less and less base material & energy to manufacture (where x is equal to real GDP growth, to stay flat with base resource usage)? I mean, yes, it happens, we are getting more and more crap products for our money (heuristics in CPI, anyone? ), but hey, we simply cannot possibly keep the pace with consumption growth by cheapening the designs, at ever-increasing pace. And it wouldn't even reduce resource usage, only keep it at today's levels. (Example: let's assume you are world-only chair maker, and you HAVE to increase your production by x% yearly, to sustain world's economy, and you can only use 100 trees a year (=flat resource usage). So, you would need to use less and less timber per chair every year, and that would have to go DOWN exponentially, as reverse to your yearly production growth. Pretty soon, your timber content per chair would be close to zero. That is simply impossible in the real world.

Space mining... The only viable option, going forward? But is it possible at all? And the energy requirements for that to happened... My gosh.

If you can not increase the "value", just play with the underlying rules. To raise the amount of USD the same house is worth exponentially, just devalue the USD exponentially!

Take a look at the half life curve of USD priced in gold grams:
http://pricedingold.com/2012/06/08/u...te-7-jun-2012/

[bushi]

but benjamen, should such debasement ever "work" economically, I would be living as a king in Poland (actually, we all Poles would), haven't been emigrated, Russian empire wouldn't collapse, and I wouldn't be typing it, for I wouldn't be allowed the luxury of open communication from behind the Iron Curtain.

There is the real component of GDP growth, and there is monetary/inflationary component of it (caused by increasing money supply). The second one is a hidden tax/theft of capital, by government/CB. If inflating GDP by printing money could ever lead to anything else than destruction of an economy, well, that's all that we would ever need to do. But I haven't seen this implemented successfully, and I really struggle to call it anything but a nonsense. Besides, it is strongly inflationary, and there's no way around it.

[benjamen]

but benjamen, should such debasement ever "work" economically, I would be living as a king in Poland (actually, we all Poles would), haven't been emigrated, Russian empire wouldn't collapse, and I wouldn't be typing it, for I wouldn't be allowed the luxury of open communication from behind the Iron Curtain.

There is the real component of GDP growth, and there is monetary/inflationary component of it (caused by increasing money supply). The second one is a hidden tax/theft of capital, by government/CB. If inflating GDP by printing money could ever lead to anything else than destruction of an economy, well, that's all that we would ever need to do. But I haven't seen this implemented successfully, and I really struggle to call it anything but a nonsense. Besides, it is strongly inflationary, and there's no way around it.

I believe most GDP growth reported by countries is merely due to the devaluation of their currency. Take a look at the U.S.; every time the stock market drops, the FED prints a boat load of money, devalues the USD, and stock prices, valued in USD, go up. This is the "feel good" effect. They are less wealthy than before (because you get taxed on your "profits"), but most people are happier because the USD number next to their stocks is higher.