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The first leg of the current bull market in gold was driven by fear and financial 
market panic. The next leg of this bull market will be driven by the skyrocketing cost of gold production, which will trigger an enormous number of mine closures [and much higher gold prices as a result].
So writes James DiGeorgia (www.uncommonwisdomdaily.com) in edited excerpts from his original article* entitled How Will We Get to $2,340 Gold?.
[The following article is presented by Lorimer Wilson, editor of www.munKNEE.com and may have been edited ([ ]), abridged (…) and/or reformatted (some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. This paragraph must be included in any article re-posting to avoid copyright infringement.]
DiGeorgia goes on to say in further edited excerpts:
Goodbye, $1,200 Gold!
How do I know this? Well, it all starts with what gold costs to produce. If producers aren’t making money, they stop producing…and, right now, today’s low gold prices are simply unsustainable for the industry….
I have analyzed the total costs of producing gold for six precious metals companies (four large and two small) and below is what I’ve found:
The average cost of both small and large precious metals companies is $1,104 per ounce of gold…Whenever prices go below cost, producers will normally cut production until prices recover. Therefore, the breakeven point is good support for an asset’s price. Prices can go below breakeven but normally not for very long. Prices can also move above historical premiums…
Hello $2,340 Gold!
The average total cost to produce gold [as mentioned above] is about $1,104, and this should act as price support…This is a moving target and has been moving higher (much greater than the global inflation rate) as costs have jumped…Gold’s cost of production ($1,104) provides a floor under prices, and [the average] historical premium [suggest] a price target of $2,340.
How Will We Get to $2,340 Gold?
- The first leg of the current bull market in gold was driven by fear and financial market panic.
- The next leg of this bull market will be driven by the skyrocketing cost of gold production, which will trigger an enormous number of mine closures.
Gold may be set to nearly double from current levels, but it didn’t drop in a straight line and it won’t return to (and surpass) its previous highs in a straight line, either…
[Editor’s Note: The author’s views and conclusions in the above article are unaltered and no personal comments have been included to maintain the integrity of the original post. Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor.]
*http://www.uncommonwisdomdaily.com/how-will-we-get-to-2340-gold-16629 (©2013 Uncommon Wisdom Daily; All Rights Reserved; James DiGeorgia is a natural resources expert and editor of Global Resource Hunter, a monthly newsletter designed to help you ride the commodity supercycle and also the editor of Junior Resource Millionaire, a weekly service that aims to help you rack up profits on trades with explosive potential in the precious metals, base metals, agriculture and energy industries.)
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Great information and I agree with the comments above. Haven’t looked into silver much but imagine gold and silver are both good to have. What are your thoughts in mining companies and investing in them?
I’d like to encourage James DiGeorgia to do a similar story about Silver, all the other PM’s and then even include Copper.
It would be very useful to know which, if not all are also now trading very close to their production costs; my hunch is that they all are and if that is correct, then when the reversal comes for Gold it will also be happening for all the PM’s!
Anyone care to post their feelings about which one of the PM’s will lead the way to recovering first half their old high price and then which one will surpass their previous all time high price.
I’m thinking Silver will lead the way in both “races”, what do you think?
I’m going to go with silver on that race as well. Gold is too expensive for people to buy. One silver coin will fill up your gas tank. One gold coin is homeowners insurance for a year on a house. If the Feds do taper on QE, then the banks will be the only thing worth putting money into. I would imagine that’s what will happen so the stocks and precious metals will tank, and we can start the 2008 cycle all over again next year. Something that I want to point out is as prices fall, premiums rise. The miners will continue profit no matter what happens as long as they keep pulling more out of the ground. As price goes down, more is sold. As price goes up, less is sold.