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I am often asked about the “omniscience” of TPTB, as if they are a bunch of geniuses.  I assure you they are NOT; but instead, a bunch of simple men that happen to be in positions of power; mostly due to family connections, a handful via inheritance, and the minority from hard work, above average intelligence, and/or ruthlessness.  All one needs to do is OBSERVE the ongoing, worldwide political, economic, and social CONFLAGRATIONS to realize there is no “method behind the madness.”  To the contrary, “Occam’s Razor” tells you all you need to know; these so-called “elites” are just chickens with their heads cut off, trying to maintain a status quo in which they retain wealth and power.

Regarding the Cartel’s “control” over Precious Metals, all they have succeeded in doing is slowing the gold and silver bull markets, which will – inevitably – fully express themselves by reclaiming their monetary roles, ala “The Once and Future King.”  Yes, “they” have exploited the world for a few decades, but not due to genius; instead, via LIES and CRIMINAL ACTIVITY, such as covertly selling the U.S. gold reserves, against the Constitutional rule requiring overt Congressional debate about such vital topics.

In “Fargo” – referenced in numerous RANTS –the ONLY way for William Macy’s character to avoid prison was to expand his crimes – until of course, everyone was DEAD.  This is no different than how a Ponzi Scheme progresses – like fiat currency, for instance – as new money MUST continually be printed to avoid immediate collapse.  As relates to the PM suppression scheme, the “unforeseen ramifications” are numerous – and deadly – such as the shocking SUPPLY response resulting from capital starvation and profit deprivation.

As a 10-year oil analyst – from 1996 – 2005 – I recall marginal oil production costs of $15-$25/bbl.  And trust me, as co-author of the bi-annual “Salomon Smith Barney E&P Spending Survey,” I had more details on this topic than nearly anyone, save Matt Simmons (a long-time colleague), Daniel Yergin (“The Prize”), and a small handful of others.  However, in the seven years since I left Wall Street, a combination of MONETARY INFLATION and “peak cheap oil” has caused production costs to SOAR, and with them, crude oil, gasoline, and heating oil prices…

OPEC’s breakeven price has soared from just $77/bbl two years ago, to a whopping $99/barrel today.

-Arab Petroleum Investments Corporation

I was FLOORED to read the below article about OPEC breakeven costs, averaging nearly $99/bbl versus $77/bbl just two years ago.  Mind you, the actual marginal cost of production is not this high, but it can’t be far off if NEARLY ALL OPEC nations have set fiscal budgets assuming such lofty prices.  Oil producers tend to be OVERLY conservative, so if they are ASSUMING $99/bbl oil, I assure you production costs are not far off…

Who Wants The Highest Crude Oil Price? Presenting The OPEC Cost Curve

On to gold miners, where I was EVEN MORE SHOCKED to read average production costs have risen to $1,300/oz – up nearly 30% in the past year alone – and could rise to $3,000/oz in just five-years…

The current all-in cost per ounce of gold production has risen from as little as $1,000/oz last year to about $1,300/oz for many producers today.  In five years, miners will need a minimum of $3,000/oz to keep producing gold.

-Aram Shishmaniann, World Gold Council CEO

…no less, from the mouth of the World Gold Council – historically, an extremely conservative organization…

Miners will need $3,000 gold price to be profitable, WGC head says

Not that it should be all the surprising, given soaring commodity prices, moribund mining profits, and the fact that global gold production only last year reached the peak levels of 2001, when gold averaged $275/ounce…

However, I remember creating a PM data base in 2005 (I aimed to be a PM analyst, but no one would hire me), when global gold production costs were closer to $400/ounce.  One could blame “peak cheap gold” for the higher costs – in the same manner as “peak cheap oil” – but let’s face it, the coincidence is too great, and shared by MANY other commodities as well.  Thus, MONETARY INFLATION is clearly the primary factor for “EXPLODING PRODUCTION COSTS,” and MONETARY INFLATION will likely catalyze marginal production costs above $3,000/oz five years from now – and potentially, MUCH MORE…

Back to the “genius” of TPTB, whose PM price suppression scheme has been solely related to the maintenance of wealth and power – DAMN THE REPURCUSSIONS.  But guess what? “Repercussions” have arrived – as most mining companies have been DESTROYED by low prices – yielding weak operating results – naked shorting – yielding capital starvation – and PROPAGANDA – yielding weak sentiment.  Consequently, production has stagnated and costs surged, while the best “human capital” has avoided the industry.

Given the ENORMOUS timeline between new discoveries – of which there have been VERY FEW in recent years – and first production, the odds of a material increase in GLOBAL gold production is slim to none for the next 5+ years, while MONETARY INFLATION will ensure surging input costs.  That timeline will only grow longer due to the end of the “low hanging fruit,” the increased amount of projects in remote areas or dangerous political jurisdictions, heightened taxation, and an aging mining labor force (trust me, this is a “young man’s industry.”).  Therefore, the price of gold MUST rise to at least $3,000 in the coming years, just to account for surging production costs, ceteris parabus.

In other words, the reasons to own gold (and silver) are NOT just rooted in “breaking the Cartel,” or even as a plain old “inflation hedge.”  The fact remains, for MULTIPLE REASONS, that production costs are EXPLODING, and will continue to do so, ad infinitum.


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