KEEP THE big picture in mind: Rule also had this to say...

KEEP THE big picture in mind:

Rule also had this to say regarding Keith Barron’s comments on KWN that global gold production was poised to fall off a cliff: “Well, Keith said so much of interest. Of course he’s a wonderful guy to listen to because he has first-hand experience. One of the items Keith was talking about were the comments from the CEO of Barrick Gold, who said that large deposits are hard to find and becoming increasingly scarce.

Although the industry spends more money each year looking for gold deposits, Mother Nature has been rather stingy with regards to serving them up this decade. A lot of the gold production that the world enjoys right now, are from mines that were discovered and put into production 20-to-25-years ago.

One of the mines in South Africa is basically 100 years old. So what they say about the fact that we are living off big deposits that were discovered a long time ago is true. Keith also pointed out that many of the discoveries we are making today are of a much lower grade and quality.


I think he’s very wise in pointing out that there is not a lot of money to be made in mostly one gram sulfide deposits. The up-front costs are too high and the sensitivity to gold prices are too high. I would just add to what Keith said that around the world, political groups and social groups want more and more of the reward for gold exploration and production, but are unwilling to take the risk.


One African nation recently made an announcement that they were going to claw back 32%. It was so poorly received that they immediately backed off and said it would only be in new projects. Well, the gold mining industry isn’t an industry where you can afford to give away 30%. There isn’t enough margin in it.


Egypt’s new government also said they will not honor mining agreements signed by Mubarak’s government. South Africa also continues with its troubles and falling production. The bottom line here is that what Keith suggests is that global gold production could be poised to fall off a cliff, and this is a warning that investors need to pay attention to.”