Official "Science News" Thread

[bcp19]

Originally Posted by cheesehead

In this post, I'm just debunking the claim of 2.4 million tonnes total production (and that all of total production could be supplied to the markets). So, I am implicitly claiming that the effect of 1000 tonnes would be greater than bcp19's dismissive ".04%" figure.

I was going by Xyzzy's link, wherin was stated: "Just this last week liens were claimed against the Federal Reserve for 2.4 million(was billion, but later corrected) metric tonnes owed to the American people as principle", Why liens would be made against non-existant gold<shrug>... but, whatever.

Current annual production (at least by one of your links) is roughly 1500 tonnes/year. Increasing that to 2500 would alter the %'s, since currently 50% goes into Jewelry, 40% into investments and 10% into industry. Assuming Jewelry and Industry remain the same, 750 & 150, Investments would have to change from 600 to 1600, or 64%. But what would really happen? Depending on the cost of mining the asteroids VS mining the planet, one of 2 things would happen, asteroid mining would be scrapped or planet mining would be reduced, in order to maintain the status quo.

1500 tonnes = ~48M troy ounces = ~$79B. 2500 tonnes=~80M troy ounces. In a 'perfect' economy Gold prices would drop to ~$1000, but that much influx would cause panic selling and destabilization, so production would be reduced somewhere to preserve the profitablity of mining it.

[xilman]

Originally Posted by bcp19

Assuming Jewelry and Industry remain the same

why do you make that assumption?

Industrial use has changed markedly in the last few years specifically because the price of gold increased. Modern circuit boards use much less gold than they used to; there's no obvious reason why they wouldn't use more if it became cheaper.

Similarly, I suspect that more gold would be used in jewellery if it were cheaper. In the UK at least, 9K gold and gold plated silver is widely sold specifically because it is so much cheaper than purer alloys. I suspect that similar considerations apply elsewhere in the world bu have no personal experience.

[firejuggler]

you forgot the emergent country, wich start to consmme luxury products. This involve gold and other precious ressources

[Uncwilly]

I would rather buy asteroid sourced gold rather than terran. Current mining of most gold rapes the land. I have stopped any buying it for jewelry and investment purposes.

[bcp19]

Originally Posted by xilman

why do you make that assumption?

Industrial use has changed markedly in the last few years specifically because the price of gold increased. Modern circuit boards use much less gold than they used to; there's no obvious reason why they wouldn't use more if it became cheaper.

Similarly, I suspect that more gold would be used in jewellery if it were cheaper. In the UK at least, 9K gold and gold plated silver is widely sold specifically because it is so much cheaper than purer alloys. I suspect that similar considerations apply elsewhere in the world bu have no personal experience.

You are taking the shortsided view. Economy will be the driving factor.
Given: GP=Gold Price, PGP=Pontential Gold Price, CS=Current Sales, PS=Potential sales
You currently spend $X to produce Y tonnes for sales (Y*CGP=CS). If you add $Z to production costs you can produce 5/3Y, but GP becomes PGP (5/3Y*PGP=PS). If CS/X < PS/X+Z the model will be scrapped.

If X = 50B, Y=1500, GP=$1660/oz making CGP ~$54M/ton (32150 troy ounces = 1 metric ton ) so CS= ~$81B. Return on expense=162%. If Y is increased to 2500, let's say GP drops to $1400 making PGP=_~45M/ton. PS would then = ~112.5B. To maintain the 162% return on investment you could only spend $69.5B total which would make Z=$19.5B to maintain profitability. BUT, if Z=19.5B to make 2/3Y which currently costs $33.3B (2/3X), then why not spend 1/3X (16.7B) and maintain current production with a now 224% return on investment?

[xilman]

Originally Posted by bcp19

You are taking the shortsided view. Economy will be the driving factor.

Perhaps.

Consider another precious metal which was used only for status-display items by the obscenely rich. I refer, of course, to aluminium.

Once the production costs came down, those substantially lower in the social heirarchy than the emperor Napoleon could afford to use aluminium tableware.


I suppose that a mere 150 years is a short-sided view in the scheme of things.

[bcp19]

Originally Posted by xilman

Perhaps.

Consider another precious metal which was used only for status-display items by the obscenely rich. I refer, of course, to aluminium.

Once the production costs came down, those substantially lower in the social heirarchy than the emperor Napoleon could afford to use aluminium tableware.


I suppose that a mere 150 years is a short-sided view in the scheme of things.

Hmmm...

Aluminium is produced from ore (primary aluminium) and scrap (recycled aluminium). In 2006 global aluminium production was 50.4 million tonnes - 34 million tonnes metal primary and 16.4 million tonnes recycled metal.
Aluminium ore, most commonly bauxite, is plentiful and occurs mainly in tropical and sub-tropical areas - Africa, West Indies, South America and Australia - with some deposits in Europe.
Bauxite is mined then refined into aluminium oxide trihydrate (alumina) using the Bayer Process, which has changed very little since the first plant opened more than 100 years ago.

1500 tons VS 34 million tons(not counting recycling) per year. Gee, we only need to find a way to mine 22000 times as much gold as we currently do, a trivial task I am sure.

[davieddy]

Give me back that 5 dollars

David

[xilman]

Originally Posted by bcp19

Hmmm...

Aluminium is produced from ore (primary aluminium) and scrap (recycled aluminium). In 2006 global aluminium production was 50.4 million tonnes - 34 million tonnes metal primary and 16.4 million tonnes recycled metal.
Aluminium ore, most commonly bauxite, is plentiful and occurs mainly in tropical and sub-tropical areas - Africa, West Indies, South America and Australia - with some deposits in Europe.
Bauxite is mined then refined into aluminium oxide trihydrate (alumina) using the Bayer Process, which has changed very little since the first plant opened more than 100 years ago.

1500 tons VS 34 million tons(not counting recycling) per year. Gee, we only need to find a way to mine 22000 times as much gold as we currently do, a trivial task I am sure.

No where near that much. For a more appropriate measure look up aluminium production in, say, 1890.

[cheesehead]

Originally Posted by LaurV

I disagree with the part where BOE selling gold influenced the market.

Which part is that? I never said that BOE selling gold influenced the market. I just said, "One could look back at what happened then."

Let's look at a contemporary report:

"Britain stuns markets with plan to sell gold reserves

Sale plan brings price of bullion close to its lowest level in 20 years
Mines' share prices tumble and the rand weakens"

http://www.independent.co.uk/news/bu...s-1092218.html

Saturday 08 May 1999

BRITAIN WILL be selling more than half of the gold held in the reserves at the Bank of England, the Treasury announced yesterday, in a move that signals the end of an era for the precious metal in the world monetary system. The surprise announcement sent the price of gold plummeting more than $9 lower to $279.90 an ounce, close to the lowest level for 20 years. The Treasury's decision was seen in the gold market as a forerunner of similar announcements by other central banks and the International Monetary Fund.

. . .

The shock hit share prices in gold-mining. South Africa's All-Share index fell by nearly 1 per cent, with AngloGold's price down nearly 5 per cent at 278.2 rand. The South African currency also weakened.

The proceeds from the UK's sale of 125 tonnes (around 4 million fine troy ounces) of gold - 3 per cent of total reserves - this financial year will be invested instead in interest-bearing dollar, euro and yen assets. Over the next few years the plan is to reduce gold reserves from 715 tonnes to 300 tonnes.

The sales will take place through a series of auctions every other month starting on 6 July. Members of the London Bullion Market Association and other institutions with gold accounts at the Bank of England, will be allowed to enter bids.

. . .

Note that this announcement was for selling 125 tonnes over several months, then 290 tonnes more over a few years. It did influence the market (I didn't say that before, but I'm saying it now), but only modestly.

Back then, some reporters and headline writers apparently considered a drop from $289 to $280 (about 3.5%) a "crash" and a "plummet", but to me that's just a modest correction.

OTOH, it was the result of a surprise. 3.5% after a surprise announcement ... not a catastrophe.

Originally Posted by LaurV

They didn't have any word to say. Their action followed the market, which followed Vietnamese's < snip >

Apparently you're referring to an incident from just last year.

I was referring to the 1999 announcement, which is why I specified, "... a few years ago."

[LaurV]

Originally Posted by cheesehead

Apparently you're referring to an incident from just last year.
I was referring to the 1999 announcement, which is why I specified, "... a few years ago."

Did you google it? It is easy, copy/paste from my message, into firefox's search box.

Here it is what happened:

The central bank stopped granting gold import licenses in May 2008

That produced market fluctuations from 2008.

In '99 the gold price rocketed to the sky and it is still doing so since. How could "selling" gold could do that?