Gold Struck by a Perfect Storm

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Where the meteorological analogy fails is the implication that the current bull run is, like a storm, a passing phenomenon when actually some deep structural and even seismic shifts are occurring in the commodity markets.

Gold, an important bellwether of the economic world finds itself the beneficiary of the perfect storm, buoyed to within a whisker of the all time high of $850/ounce this last week by some very inclement economic weather. Time to head for the lifeboats?...

Where the meteorological analogy fails is the implication that the current bull run is, like a storm, a passing phenomenon when actually some deep structural and even seismic shifts are occurring in the commodity markets. Yes, we have gone geological. Reflecting this, most hard assets, oil prices amongst them have risen between threefold and tenfold in the last five years and remain stubbornly robust...

Despite high prices, global gold mine production is actually falling. South Africa, the world's largest producer is at levels not seen since the early 1930s with production at roughly one quarter the level seen in 1970. The country's Witwatersrand basin deposit is advanced in years, with declining grades and higher costs as miners push to extremes by going 2.5 miles down. The story is repeated in the USA where production peaked in 1998, Australia in 1997, Canada in 1991 and Brazil in 1982.

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