October 19, 2017 11:56 am CDT
Gold Production Cliff: 2017
By Christian A. DeHaemer, Wealth Daily


All gold is from space.

Scientists believe 200 million years after Earth was formed, a bombardment of gold meteorites blasted the planet.

We know this because when the earth was formed, all the heavy metal was sucked down to its iron core. Seismological studies have concluded there is enough gold and platinum 7,000 miles deep to coat the earth's surface in gold to a depth of fifteen feet.

This era of core formation left the earth's crust without precious metals.

However, precious metals are thousands of times more abundant in the mantle than can be explained by such things as continental drift and volcanoes.

Gold from the Skies

Scientist have theorized that this lucky abundance of findable gold results from a cataclysmic meteorite shower that hit planet Earth after the core formed. The full load of meteorite gold was thus added to the mantle.

The gold bombardment theory was recently tested by Dr. Matthias Willbold and Prof. Tim Elliott of the Bristol Isotope Group in the School of Earth Sciences, who analyzed rocks from Greenland that are nearly four billion years old. These ancient rocks were post-core development and pre-meteorite bombardment.

From Nature:

The impacting meteorites were stirred into Earth's mantle by gigantic convection processes. Subsequently, geological processes formed the continents and concentrated the precious metals (and tungsten) in ore deposits which are mined today.

Dr Willbold continued: "Our work shows that most of the precious metals on which our economies and many key industrial processes are based have been added to our planet by lucky coincidence when the Earth was hit by about 20 billion billion tonnes of asteroidal material."

Bottom line: Buy gold. They aren't making any more of it.

They have been digging it out of the ground in record amounts.

That said, the National Bank Financial says that there will be a production cliff in 2017.

This is a peak gold scenario where the major miners will suffer a sharp production decline. This would necessarily spike the price of gold.

Analysts Steve Parsons, Paolo Lostritto, and Shane Nagle believe this drop in production is simple: Too few large deposits have been found to sustain current production rates. Many miners are canceling projects due to cost constraints.

From the NBF report:

Project congestion marked by capacity constraints and resultant delays and cost pressures has forced a more orderly sequencing of projects. High-quality projects have stayed at the front of the queue with delays, while the rest have seen significant delays or, worse, been shelved.

We contend that is already reflected in the shares of these companies, not because the issue is well understood, but because investors have simply responded to the side effects: capex pressures, project delays and eroding margins.

Gold Production Declines: 2017

The NBF note concludes:

On an aggregate basis using mine and project reserves, we forecast an increase in gold production over the next three years as Barrick, Newmont, Goldcorp and Yamana complete the construction and ramp-up cycle for projects that are already in the queue. Thereafter, starting in approximately 2017, production declines are in the cards for nearly all companies as the project queue and discovery frequency are inadequate to replace production.

More gold now, less gold in three years... That should be right about the time the sheeple wake up and realize you can't print your way out of a debt crisis.

In that type of scenario, an ounce of gold priced at $5,000, even $10,000, would be logical — unless, of course, Earth gets another golden shower from space.

All the best,

Christian DeHaemer

Since 1995, Christian DeHaemer has specialized in frontier market opportunities. He has traveled extensively and invested in places as varied as Cuba, Mongolia, and Kenya. Chris believes the best way to make money is to get there first with the most. Christian is the founder of Crisis & Opportunity and Managing Director of Wealth Daily. He is also a contributor for Energy & Capital. For more on Christian, see his editor's page.

 
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