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The BIS-network dupes the gold mining industry - Nico Simons

The BIS-network dupes the gold mining industry  - Nico Simons
By Nico Simons - MoneyInsights.org 2 years ago 4803 Views 7 comments

In our paper from March 23, 2016 we concluded that JPM [J. P. Morgan] in cooperation with the BIS [Bank of International Settlements] controls the dollar gold price by using their very dominant position in gold derivatives in the US Banking System. JPM held during 1999 – 2014 an average of 3.262 paper metric tons gold (derivatives) available for interventions on the development of the dollar gold price with the BIS as counterparty. Furthermore we concluded that the paper volume sets the dollar gold price and that there is almost no influence on the dollar gold price from the physical supply and demand. Overall the conclusion is that there is no free market for gold.

In our paper from March 23, 2016 we explained that JPM and the BIS are operating agents for the BIS network to maintain the confidence in the dollar and therefore manipulate the dollar gold price. We spoke about the artificial price drop in 2013 and the possible following dishoarding by private holders.

In this paper we will analyze the financial position of three leading mining companies considering the manipulated dollar gold price. We analyzed the annual statements of Barrick, Newmont and Goldcorp with their key business in gold mining (other products are by-products) and a combined market-share 2015 of 15,3% on gold mining worldwide. We concluded that there is in retrospect a combined average dollar gold price 2013 - 2015 needed of $ 1.890 per ounce to get break even (= the point of balance making neither a profit nor a loss). The realized combined average dollar gold price 2013 – 2015 is $ 1.274 per ounce. On any sold ounce gold the combined three mining companies loose more than dollar $ 600 per ounce, or 48%. It goes without saying that they struggle to stay in business.

1. The analyzed gold mining companies

Barrick, Newmont and Goldcorp


Barrick Gold Corporation is the largest gold mining company in the world, with its headquarters in Toronto, Ontario, Canada. Barrick employs approximately 27.000 employees and contractors worldwide. Market-share Barrick 6,0% of the new produced gold 2015.

Newmont Mining Corporation is the world’s second largest producer of gold, with its headquarters in Greenwood Village, Colorado, USA. Newmont employs approximately 34.000 employees and contractors worldwide. Market-share Newmont 5,7% of the new produced gold 2015.

Goldcorp is a gold producer headquartered in Vancouver, Britisch Columbia, Canada. Goldcorp employs approximately 14.000 employees and contractors worldwide. Market-share Goldcorp 3,6% of new produced gold 2015.

2. The (combined) yearly net income/loss

Since 2013 net loss


The next table is based upon the (consolidated) statements of income (or loss) listed in the companies annual reports.

The gold mining industry is clearly no steady making money industry. We will analyze this later.

3. The combined all-in company costs and the dollar gold price per ounce

Loss since 2013, even though the change of mindset.


Based upon the annual accounts we combined the figures from Barrick, Newmont and Goldcorp regarding average realized dollar gold price per ounce and the all-in company costs per ounce through the years 2002 -2015.

What we see is that there is a kind of balance between the dollar gold price and the all-in company costs per ounce gold through the years 2002 – 2012, but from 2013 – 2015 there is a strange disconnection.

It’s very clear that the combined all-in company costs are higher than the combined average realized dollar gold price per ounce. Since 2013 every ounce is sold with loss.

Companies aim for a profitable production. Only that way they can stay in business.

Regarding this issue in April 2013 Jamie Sokalsky, CEO of Barrick, wrote: “Over the past decade, our industry has been focussed on increasing gold production, often without regard for the costs. In essence, this was growth for growth’s sake”. And Peter Munk, Founder and Chairman of Barrick, wrote “Barrick is leading the change from a focus on growth, in favour of maximizing free cash flow and growing rates of return”.

Since 2013 Barrick uses aggressive cost management, meaning: reducing costs and an ongoing review of costs is an integral part of the management of business.

The gold mining industry doesn’t seem to succeed in the objective for a profitable production so far.

In our view this is another indication that there is almost no influence on the dollar gold price from the physical supply and demand. The paper volume sets the (manipulated) dollar gold price.

4. The disconnection between the all-in company costs and the realized dollar gold price

Net loss per ounce gold US $ 622, or 48%


The following table shows us the combined nett loss of Barrick, Newmont and Goldcorp over the years 2013 – 2015, divided by the produced ounces gold. This is the combined nett loss per ounce. If we add up the combined average realized dollar gold price, the sum shows the combined all-in company costs from Barrick, Newmont and Goldcorp together.

What we see in retrospect is that a dollar gold price 2013 – 2015 of $ 1.890 is needed to get break even.

The average realized dollar gold price 2013 - 2015 was $ 1.274 per ounce. Ergo, the average net loss was US $ 622 per ounce, or 48%.

5. The view of the World Gold Council

WGC 2012: “Higher gold price needed to stay in business”


The World Gold Council is the marketing development organisation for the gold industry. The World Gold Council has 18 members, including Barrick, Newmont and Goldcorp.

World Gold Council CEO Aram Shishmanian said on May 14, 2012 that because of the sharp increase in mining costs the dollar gold price needed to reach $ 3.000 an ounce in 2017 for the industry to stay profitable and stay in business.

6. How long can this go on?

The BIS-network keeps a lid on the dollar gold price (see our paper dated October 7, 2015). Since 2013 the dollar gold price per ounce gold is lower than the all-in company costs per ounce gold. The question is how long this can go on.

Every year the loss per ounce continues will cost the gold mining industry worldwide 60 Billion dollar.

Worldwide mine production 2015: 3.100 tons

Worldwide mine production 2015: 99.688.000 ounces

Loss per ounce: $ 600

Total loss worldwide mine production: 60 Billion dollar

=========



Nico Simons is a Dutch investigative journalist on financial issues, especially monetary issues. His articles are regularly published on MoneyInsights.org.


The author is not affiliated with, endorsed or sponsored by Sprott Money Ltd. The views and opinions expressed in this material are those of the author or guest speaker, are subject to change and may not necessarily reflect the opinions of Sprott Money Ltd. Sprott Money does not guarantee the accuracy, completeness, timeliness and reliability of the information or any results from its use.

GT van Doorn 2 years ago at 10:32 AM
A junior like Endeavour Mining produces GOLD for less than $1000. More juniors are way cheaper than the mentioned majors. Furthermore GG's loss in 2015 could be affected by unwinding hedges. Therefor I think this report is not 100% reliable.
Nico Simons 2 years ago at 9:04 AM
I disagree with you. Look at the annual report 2014 of Endeavour. The all--in company costs per ounce gold for 2014 are $ 1968 per ounce based upon their consolidated nett loss of ($ 328.100.000), 465.770 produced ounces and relized gold price of $ 1.264. But the point of this paper is that the BIS-network dupes the gold mining industry.
beLIEve 2 years ago at 1:43 PM
The following article carries a reference to what might have been a recent ....BIS INTERVENTION......IN GOLD FUTURES.

'ICE & CME: The Exchange Casinos That Control Practically Everything'
www.stateofthenation2012.com/?p=46630

What can the miners do ?
CLUB TOGETHER....and launch a ...Class Action Lawsuit.

www.sotosllp.com/2015/12/gold-price-manipulation-class-action-brought--on-behalf-of-canadian-investors

www.sotosllp.com/wp-content/uploads/2015/12/Notice-of-Action-Issued-December-18-2015.pdf

www.sotosllp.com/wp-content/uploads/2016/02/Ammended-Statement-of-Claim-filed.pdf

As to the subject of mining costs exceeding gold spot..........

Isn't that the game the "EL-iteS" play ?
Cripple companies and render them bankrupt, enabling the PERPS to buy them up at under market value ?

Is it possible the ....GOLD MANIPULATORS......COVET....the.....GOLD MINES ?
beLIEve 2 years ago at 1:56 PM
CORRECTION........spelling......apologies......

www.sotosllp.com/wp-content/uploads/2016/02/Amended-Statement-of-Claim-filed.pdf
Randall 2 years ago at 8:23 PM
Mr. Simons I would appreciate your answer to your question.
How long can this (manipulation) go on?
Thank you
bernie 2 years ago at 5:47 PM
Until it does not...
c1ue 2 years ago at 4:47 PM
I'm sorry, but this analysis seems very weak.
There are a lot of factors for why companies make losses - the simplistic analysis of loss vs. gold produced is a very weak comparison point.
For example, it would be a lot more interesting if the analysis looked at the realized gains or losses from derivative gold hedges utilized by these companies. They have used these at least to some extent in the past in order to even out cash flow - and it is here that I would expect banksters to be gouging the gold producers.
Gold production is also significantly a function of energy costs - these too have varied widely in the past years, the past 2 in particular.
If you're going to perform analysis, then at least go into a little bit of detail to show that you have some idea of how the gold mining business actually works.
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