An Article - That Will Propel Gold Way Up "World Gold Supply Runs Out"

World Gold Supply Runs Out

I have had numerous information pieces about gold on the blog. I have posted over and over - saying "Buy Gold and Silver" protect the value of the dollar you have right now!


This article out today - In My Opinion - will propel Gold Upward Big Time!

Article:

Global gold production is in terminal decline despite record prices and Herculean efforts by mining companies to discover fresh sources of ore in remote spots, according to the world's top producer Barrick Gold.

Aaron Regent, president of the Canadian gold giant, said that global output has been falling by roughly 1m ounces a year since the start of the decade. Total mine supply has dropped by 10pc as ore quality erodes, implying that the roaring bull market of the last eight years may have further to run.

"There is a strong case to be made that we are already at 'peak gold'," he told The Daily Telegraph at the RBC's annual gold conference in London.

"Production peaked around 2000 and it has been in decline ever since, and we forecast that decline to continue. It is increasingly difficult to find ore," he said.

Ore grades have fallen from around 12 grams per tonne in 1950 to nearer 3 grams in the US, Canada, and Australia. South Africa's output has halved since peaking in 1970.

The supply crunch has helped push gold to an all-time high, reaching $1,118 an ounce at one stage yesterday. The key driver over recent days has been the move by India's central bank to soak up half of the gold being sold by the International Monetary Fund. It is the latest sign that the rising powers of Asia and the commodity bloc are growing wary of Western paper money and debt.

China has quietly doubled holdings to 1,054 tonnes and is thought to be adding gradually on price dips, creating a market floor. Gold remains a tiny fraction of its $2.3 trillion in foreign reserves.

Gold exchange-traded funds (ETFs) – dubbed the "People's Central Bank" – have accumulated 1,778 tonnes, making them the fifth biggest holder after the US, Germany, France, and Italy.

Ross Norman, director of theBullionDesk.com, said exploration budgets had tripled since the start of the decade with stubbornly disappointing results so far.

Output fell a further 14pc in South Africa last year as companies were forced to dig ever deeper - at greater cost - to replace depleted reserves, not helped by "social uplift" rules and power cuts. Harmony Gold said yesterday that it may close two more mines over coming months due to poor ore grades.

Mr Norman said the "false mine of central banks" had been the only new source of gold supply this decade as they auction off reserves, but they are switching sides to become net buyers.

Barrick is moving fast to wind down the remaining 3m ounces of its infamous hedge book over the next twelve months, an implicit bet on rising gold prices over time.

Mr Regent said the company had waited too long to ditch the policy, which has made the company enemy number one among 'gold bug' enthusiasts. The hedges oblige Barrick to deliver part of its gold into futures contracts set long ago at levels far below today's spot prices.

The strategy worked well in the falling market of the 1990s, but has cost the company dear in lost profits this decade. "Hindsight is always 20/20," said Mr Regent, who was appointed from the outside earlier this year.

Barrick bit the bullet in the third quarter, taking a $5.7bn charge against earnings on hedge contracts. Liberation is at last in sight. In 2001 the hedge book topped 20m ounces.

Mr Regent said the hedge policy has weighed badly on the share price and irked investors, becoming a bone of contention at every meeting. The financial crisis brought matters to a head as markets fretted about counterparty risk. "It was clear to me that there were a significant number of institutions who wouldn't invest in Barrick because of the hedge book," he said.

Barrick produced 1.9m ounces of gold last quarter, down from 1.95m a year earlier. Costs have been "trending down" to $456 an ounce, though rising energy prices pose a fresh threat. Total reserves are 139m ounces, far ahead of rival Newmont Mining at 86m.

The hedge book venture has not been a happy one, but those who predicted that Barrick would eventually "blow up" on its contracts may owe the company an apology.

A Simple Question - What the H*&% is Happening and Why aren't Prices reflecting it?

So, What the H*&% is happening?
What do I mean by that?
Have you taken a look at the dollar index recently?



What it is at this moment.



The dollar has been in a decline for days now - I haven't even seen those little bounces back and forth - up and down recently.

Lets go ahead and take a look at the last 6 months of the Dollar Index:


So, lets get this straight - the dollar high for the year was in March around the 90 range - right?

Now it is in the 76 range!
Let's see, by my calculations that is a 14 POINT INDEX DIFFERENCE! in 6 months!

Now - you still wonder why I have asked what the H*&% is going on due to the dollar index?
Let's look at this gold chart from March of 09

Gold was trading anywhere from the $890s to the $950s per ounce. Right now gold is at $988.

What I find very curious is the fact there is only a difference of about $30 per ounce of gold as it is now to what it was when the dollar was at it's strongest point this year!

How can that be? If there is even a small tip of a dollar strength at a .01% up - gold drops in price immediately. Yet, right now there is a 14 POINT DIFFERENCE in the index of the strength of the dollar from February 09.

Since this past February, we have also had the disclosure of China purchasing over 400 tonnes of gold since 2003, Barrick is now eliminating their gold hedges, besides the fact the Fed is monetizing the debt and buying the U.S. bonds, since no one else seems to want them now.

This shows, for those who have still had doubts, something is NOT right in the metals market. Since gold is priced based on the dollar at this time and the dollar has lost 14 points in just 6 months, yet gold has not reacted to that dramatic points lost on the index. That means only one thing.. some big players are behind the scenes throwing everything they have at the metals market and for the moment it is working. But for how much longer?

A wonderful article came out yesterday through GATA - this article explains almost everything about the metals market - the hows and whys of things. I highly recommend it to everyone, who is interested in metals!

http://www.golddrivers.com/gata2.aspx

Here is another article about the scams in the metal's market by the biggest players and Comex exchange that is being perpetrated on innocent people, trying to protect their dollar value.

http://www.mineweb.com/mineweb/view/mineweb/en/page33?oid=88713&sn=Detail

So, I now again ask - with the dollar index dropping, other countries buying gold, the amount of metals in EFT's and other gold funds - being a scam and the same gold being sold over and over to unsuspecting people, What the H**% is happening with the gold prices?

Oh, I believe we can add oil to the list too - the prices of oil do not match the dollar index at this time either, though that one - you won't hear me complain about. Though I know $10 a gallon or more gas prices are in our future... just how soon? Besides will it still be affordable to those who have perserved their wealth through metals?