The Great Gold Supply Disconnect: Market Severely Undervalues Price

This had a wonderful impact on the price of U.S. crude oil…… now down $2.15 to $46.05 a barrel. This low oil price continues to gut the U.S. oil industry even though the media suggests that the Shale Oil Industry is now profitable at $20-$40 a barrel. I will be publishing an article shortly on the Permian Basin, which is now the Darling of Wall Street and the U.S. shale oil Industry. Everyone is jumping into the Permian to make that big money… or so they believe.

Regardless…. collapse is on its way because the very energy we use to run everything is rapidly disintegrating.And without energy, the global gold supply would most certainly evaporate into thin air.

THE GREAT GOLD DISCONNECT:How The Market Has Severely Undervalued The Gold Price

The Fed and Central bank magicians have fooled the audience with a clever slight of hand that a newly printed $100 bill, which costs 13 cents each to produce, is worth $100 in gold, it isn’t. However, the skyrocketing gold price hasn’t been BAKED INTO THE CAKE YET, but it will.

Before I show you the Gold Supply Disconnect, let’s look at this interesting chart which show the falling ore grades of five different gold producing countries:

At one time (1900), the average gold ore grade in the world was over 20 grams per ton…. 32 grams equals one troy ounce. Today, the top gold miners are struggling to produce gold at a little more than 1.2 grams per ton.  Back when Nixon dropped the U.S. Dollar-Gold peg in 1971, the average gold ore grade from these five countries was approximately 8-10 grams per ton…. nearly EIGHT TIMES higher than today.

When means, the gold mining industry is now producing the most expensive gold dust in history…. and doing so for peanuts.

Furthermore, we also have the falling EROI – Energy Returned On Investment of oil that is used to extract and produce gold:

Thus, falling global gold ore grades and the declining EROI of oil means it costs a great deal more to produce gold today than it did in the 1900’s and especially in the past 15 years. However, the profitability and the share prices of the top five gold miners have suffered greatly since the gold price peaked in 2011.

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