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.FinancialArticleSummariesToday.com and 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.)
No one has a crystal ball and I certainly don’t claim to have one. [Nevertheless,] I strongly believe that the prices we see today in gold and silver will be looked back upon in the next few years as a great buying opportunity. The data I read and understand tells me the case for gold and silver is now a strong one…If you are conservative dollar cost average into a position for a long time now [otherwise] I am OK with a full allocation into gold and silver at this point in time… Read More »
A more aggressive devaluation of paper currencies is on the horizon thus the whole PM Complex is completely underpriced. Averaging in from this point on seems warranted. Below is a full explanation as to why that is the case. Read More »
The historical record shows that those who get washed out during big corrections miss the greatest buying opportunities of a bull market. With that as context, what can we expect from gold moving forward? Let’s start with the short term. Read More »
This article presents the key highlights in Ronald Stoeferle’s 7th edition of “In GOLD We TRUST” in which he takes an holistic view on the latest developments in the gold market laying out the fundamental arguments why the gold bull market remains intact and concluding, based on conservative assumptions, that the long-term price target for gold is $2,230. Read More »
How should investors approach sub $1,300 gold? The Bull and the Bear case is presented here as analysts each take a side and answer five questions. Read More »
It’s been a tough road for precious metals but the path ahead has strong potential of being significantly profitable and in a short period of time. The buying opportunity that we’ve spoken of for months could be days away. When precious metals equities rebound, they rebound violently. Read More »
Nearly all markets except the dollar reacted rather badly to Ben Bernanke’s news conference – even though it actually contained no news – Treasury yields soared, stocks were whacked, and so was gold. While the charts certainly don’t look good in the short term, though, it should be pointed out though that investors with a longer time horizon probably won’t make a big mistake by buying on weakness. That being said, however, in the short term all the tentative evidence that a bottoming process may be under way has by now been eradicated. Below are a number of charts illustrating the situation. Read More »
We can find nothing – nothing – that has happened over the past two years that invalidates the principal reasons we’ve laid out for owning precious metals. [This article] looks at the key reasons why we originally recommended gold and silver plus, sadly, several new drivers that have developed recently all of which confirm that the bruised precious metal investors out there should still sleep well at night, secure that the foundational rationale for holding gold and silver remains intact. Read More »
Is it time to admit defeat, sell our positions, slink into a cave, and lick our wounds? Absolutely not. The only thing that changed over the past 60 days was the price of gold, and perhaps the mainstream’s perception of our industry. The realities of the fiscal and monetary state of the world, however, did not. Amid the ongoing rollercoaster ride of gold prices, clearheaded thinking reveals reasons to be optimistic. Read More »
The majority of analysts maintain that gold will reach a parabolic peak price somewhere in excess of $5,000 per troy ounce in the next few years. Given the fact that the historical movement of silver is 90 – 95% correlated with that of gold suggests that a much higher price for silver can also be anticipated. Couple that with the fact that silver is currently greatly undervalued relative to its average long-term historical relationship with gold and it is realistic to expect that silver will eventually escalate dramatically in price. How much? This article applies the historical gold:silver ratios to come up with a range of prices based on specific price levels for gold being reached. Words: 691 Read More »