1200 for gold has been an important number going back to 2013. It has a fundamental reason.
According to SNL Metals & Mining database, part of S&P Global Market Intelligence, the top 19 public gold companies produced gold at a weighted-average cost of US$868/oz, which is slightly lower than US$889/oz reported in the third quarter.
The lowest-cost producer, Centerra Gold (TSX:CG), mines gold at $586 an ounce, while the second-lowest in the group, ASX-listed Evolution Mining (ASX-EVN), produces at $674/oz. Barrick Gold (TSX, NYSE:ABX), the world’s most valuable producer of the precious metal, was third on the list at $732 an ounce. Barrick’s costs have dropped 12% in 2016, compared to 2015.
Topping the higher-cost end of the spectrum was Harmony Gold Mining (NYSE:HMY), which weighed in at $1,129/oz, followed by Detour Gold (TSX:DGF) and AngloGold Ashanti (NYSE:AU), which had AISCs of $1,124/oz and US$1,047/oz, respectively.
So if gold drops below 1200 of an extended period of time. The higher cost mines will shut down. This will reduce supply. As price drops demand increases. The fiat currencies see gold as a threat that must be controlled so they can't risk shutting off supply or let gold rise to a price that would threaten the fiat currencies.
So gold oscillates around that 1200 number. |
