Our Terms of Use and Privacy Policy have changed. We think you'll like them better this way.

John Rubino--Gold Mining Becomes Profitable Thanks To Oil Price Implosion #2459

  • Broadcast in Finance
  • 0 comments
Financial Survival Network

Financial Survival Network

×  

Follow This Show

If you liked this show, you should follow Financial Survival Network.
h:215903
s:7269931
archived

John writes, a few years ago (when the world was very different) veteran mining analyst Jay Taylor told me something that seemed counterintuitive: Deflation can actually be a good thing for the gold and silver mining business — if the prices of mining inputs like oil fall faster than the price of precious metals.

In other words, it’s not inflation or deflation per se that matter, but the distribution of price trends. “With quantitative easing,” said Taylor, “the liquidity being pumped into the system has caused energy and labor costs to rise, which has more than offset higher precious metals prices. Historically, the miners have actually done better in a deflationary environment in which gold and silver are seen as monetary metals and the cost of getting them out of the ground declines due to lower energy and labor.” 

So the relationship of gold to the rest of the commodities complex is a good indicator of the mining environment. Gold might be down, but if it’s relatively strong, the mining equation is favorable. Today it's improving. 

Comments

 comments