I have commented on the lack of future resources and most importantly reserves of gold coming through the mining arena, and now we start to see some numbers. As someone who has been involved in gold exploration for 30 plus years, this is going to be the massive "short" which is going to bite. You simply just cannot walk out and find new gold resources. The majors are not investing in gold exploration, preferring to get their all up costs of production down...the junior who have been bankrupt in terms of technical capacity for a long time now (when you really do need the smartest and most technically savvy people in exploration to find the hidden gold deposits), are now bankrupt in terms of being able to finance exploration.....If you look at what the Junior sector is doing, there is an almost total lack of new green fields multi-million ounce discoveries of commercial significance at these gold grades....the downward trend is blatantly obvious, and given all the easy gold mines that outcrop have just about been found..watch this space. The downward trend will continue for 10 plus years...my bet is about a generation...
read on for some more other figures
Lack Of New Discoveries, Slower Mine Project Development Weighs On Gold Industry:
SNL By ***** News Friday July 18, 2014 10:45 AM (***** News) -
A downwards trend of new discoveries and slower development of mine projects is weighing negatively on the gold industry, said SNL Metal & Mining. “Over the past 24 years, mining companies discovered 1.66 billion ounces of gold in 217 major gold discoveries, SNL Metals & Mining's 2014 edition of Strategies for Gold Reserves Replacement shows,” they said. “While that sounds like a significant amount of gold, it falls short of the 1.84 billion ounces produced over the same period. “In addition, the amount of gold discovered and the number of major discoveries (defined as any deposit with a minimum of 2 million ounces of contained gold) have been trending downward over time, from 1.1 billion ounces in 124 deposits discovered during the 1990s to only 605 million ounces in 93 deposits discovered since 2000.” According to SNL, over the last 15 years is even more alarming for potential production from major discoveries as “assuming a 75% rate for converting resources to economic reserves and a 90% recovery rate during ore processing, the 674 million ounces of gold discovered since 1999 could eventually replace just 50% of the gold produced during the same period.” They also point out that only a third of that discovered gold is actually put into reserves or production, and ongoing political, environmental, or economic hurdles lessen the chances of that gold becoming available for production in the near term even further. SNL said that the time it takes to bring a deposit into production is also a cause for concern as between 1985 and 1995, 27 mines with confirmed discovery dates began production an average of eight years from the time of discovery. “The time from discovery to production increased to 11 years for 57 new mines between 1996 and 2005, and to 18 years for 111 new mines between 2006 and 2013. (For this analysis, expansions and mine redevelopments are not included as they are not comparable with new mine developments.),” they said. "The length of time from discovery to production is expected to continue trending higher: 63 projects currently in the pipeline and scheduled to begin production between 2014 and 2019 are expected to take a weighted-average 19.5 years from the date of discovery to first production.” The firm attributes the length of time between discovery and production to increased and more detailed feasibility work, hurdles imposed by greater social and environmental awareness, longer and more demanding permitting processes, increased need for infrastructure and processing capacity due to lower ore grades and/or more remote locations, limited availability of capital, and scarcity of experienced personnel. “As it can take several years of exploration for a new discovery to be defined, it is too early to tell whether the surge in discovery-oriented exploration since 2010 has moderated the downward trend in the number and richness of new discoveries,” SNL said. “The tough financial environment for junior explorers over the past two years suggests that the longer-term downward trend in discoveries will likely continue for at least the next few years.”
"Our view is that gold and silver are in the formative, difficult for many traders to believe, stage of a nascent, but powerful bull market. We believe that gold and silver are beginning to price in something ahead … something we cannot yet see clearly, but nevertheless is real enough to underpin this market with ample buying pressure, even into managed sell downs.
Update 1: Adds additional commentary in several paragraphs regarding our expectations for gold and silver.
For evidence to support the stealthy bull market getting underway, we confidently point to gold and silver’s resilience in recent trade, the very powerful bottom-looking signature now forming in gold shares indexes, with inverted head and shoulders breakouts showing, clear outperformance by silver over gold of late, with the metals nearing a more favorable part of the annual cycle just ahead as July goes off the board.
One clear indication that has come from this review is the fact that even with an aggressive, high volume sell-down last Monday and Tuesday – one that had the appearance of a wholesale exodus by the trend-following Managed Money traders – we find instead that they more or less held their ground and much of their net long positioning (as detailed above). Doesn’t that amount to a sell raid failure for the short side? … Surprise!
...Most anything can happen short term, but at some point gold and silver are going to catch a tail wind strong enough that those attempting to prevent runaway breakouts could be overwhelmed. It is in such cases that the trader community on the COMEX becomes its most cutthroat and merciless. If the other traders sense a trapped large trader or group of traders, you know, maybe one with a way-too-huge-short position in a rising price environment as an example … well, let’s just say that all traders consider it a duty to pile on and make them pay… Watch for it.
This is certainly not, repeat not, the kind of environment we would personally feel comfortable on the short side of. Not even for a lightning fast minute. Got that?
At
http://www.gotgoldreport.com/2014/0...short-silver-too-vulnerable-to-a-squeeze.html