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How do you think increased mining costs will impact supply & demand and the price of gold?

January 6, 2014
Video Transcript

The cost of mining has become astronomical. Between all the new environmental regulations, all the new restrictions that are placed on mines, the cost of getting gold out of the ground now is over a $1,000 an ounce for most mining companies. So if the price goes any lower, the mines simply shut down. Now your new supply is basically gone. So again, the demand is not going to go anywhere, but the supply disappears. We are right about at that threshold now. So your downside is maybe 100 to 150 an ounce, your upside is unlimited. If I can have a 10% downside and an unlimited upside, tell me where else you're going to get that?

So to me, that's the fact that somebody has to go out and dig that stuff out of the ground and it takes an incredible amount of energy, an incredible amount of work, an incredible amount of processing. When you look at an ounce of gold, I mean realize that, hundreds of tons of rock had to be moved to get that ounce of gold. Barrel after barrel, after barrel after barrel of oil was consumed both in digging it up, then smelting it, processing it, and chipping it, it's a tremendous store of energy, as well as, the metal itself. We are right about at the cost of production now. So if you're at the cost of production, you basically have a pretty nice floor underneath you.

Again, again, if it drops another 10%, who cares? You don't want to buy it today and sell it tomorrow. It's not a trading vehicle. If you want to trade things, go trade stocks. This is a buy, hold, buy, hold, and just accumulate...accumulate...accumulate for yourselves, for your children, and for your grandchildren.

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