Originally Posted by Fedaykin
Even presuming you aren't FOS, the only reason mining gold @ $1500/oz is worthwhile is if the price is inflated to > $1500/oz. It does not mean that $1000-1500/oz is the cost of mining gold in general.
It's exactly parallel to the tar sands and oil. All the morons who claim extracting the tar sands will reduce the price of oil don't understand the basic economics of the situation. The only reason extracting oil out of tar sands is starting to make economic sense is because of the high cost of oil. If the cost of oil drops again, it won't be economically viable to extract oil from tar sands.
Same with gold or any other mineral that requires significant effort to extract. The price of the commodity determines what operations are economically viable, not the other way around.
Goldcorp costs are about average, and they're operating on razor thin margins in 2013.
Goldcorp Inc. (TSX: G)(NYSE: GG), a leading global gold producer, is one of the companies that report all-in sustaining costs per ounce. Citing the company’s 2013 first-quarter results, all-in sustaining cash costs totaled $1,135 per ounce.
The most expensive place to mine gold is in South Africa. They have mines that cost over $1500/oz. Obviously, they slowed down or stopped production. I googled an article written today that estimates that 60% of the South African industry is in loss-making territory at these prices.
Analysis: Price-cost pinch dulls last luster of South Africa's gold
The cheapest place to mine is in Nevada at $500/oz. But gold would be worth a lot more than cost if Nevada had the only mines in operation.