U.S. Gold Production Finally Hit Hard Due To Low Price

The lower price of gold has finally taken its toll on U.S. gold production.  Domestic gold mine supply fell considerably in May compared to the same period last year.  This is a significant amount as the United States is the fourth largest gold producer in the world.

According to the most recently released data by the USGS, U.S. gold production declined a whopping 14% in May.  Gold production for the month of May fell from 17.3 metric tons (mt) in 2014 to 14.9 mt this year:

U.S. Gold Production Jan-May 2015

For the first five months of the year, (Jan-May), U.S. gold production is down 10%, from 85.3 mt in 2014 to 76.9 mt currently.  The majority of declines came out of Nevada.  Gold production in Nevada fell from 61.8 mt Jan-May 2014, to 56.1 mt this year.

If current trends continue, U.S. gold production will fall below 200 mt in 2015.  Last year, the U.S. produced 210 mt of gold (according to the USGS), so a 10% decline would amount to 21 mt.  Thus, overall U.S. gold mine supply could fall to 190 mt in 2015.

The last time U.S. gold production was below 200 mt was 28 years ago in 1987:

U.S. Gold Production

I don’t have the figure for 1987 in the chart, but it was 154 mt.  Basically, U.S. gold production hasn’t been this low for nearly three decades.  That being said… does it really matter?  According to the clowns on CNBC, gold is just a barbarous relic.  Furthermore, the U.S. continues to export more gold than it produces and imports.

With Americans consuming nearly double the amount of gold jewelry (47.5 mt) than physical bullion investment (24.2 mt) in the first half of 2015, who needs the barbarous relic anyhow??  Which is why the U.S. continues to show a trade deficit when it comes to gold.

Unfortunately, Americans will be the last to realize the powerful monetary and store of wealth properties of gold.  As the Chinese and Indians continue to consume nearly 100% of global mine supply… there is very little left over for Western investors who prefer highly leveraged debt based paper and digits.

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11 Comments on "U.S. Gold Production Finally Hit Hard Due To Low Price"

  1. And still mining shares decline. One day they will arise. When manipulation stops. Then one has to wonder how many mining properties will be “nationalized”or contractual rights taken from them.

  2. YES … there will be a time when mining co’s and their land will be ” well …… money grounds instead of money trees and the PTB could not let that happen …. I expect bankruptcy , and takovers to come

  3. DesertLady51 | August 31, 2015 at 6:29 pm |

    Average direct cost of production for Nevada gold is $575/oz, lowest in the world. If production is dropping, it isn’t price that’s driving it. The second chart shows lowest production past 10 years when price was at at an all time high. Lower supply is simply meeting lower demand indicating economic factors are deteriorating worldwide. Another indicator is the collapse of silver, copper, zinc, iron, …… Media glad tidings don’t change reality. It’s getting ready to hit the fan.

    • DesertLady,

      If you are referring to cash costs for gold mining in Nevada, they are not total costs. Even Barrick states Cortez and Goldstrike’s sustaining costs are $812. Furthermore, these are not total costs as they deduct by-product credits. In addition, there are less profitable smaller gold mines in Nevada such as Allied Nevada that just declared bankruptcy.

      “supply is just meeting lower demand?” You can’t be serious. The U.S. continues to export all of its gold mine supply and imports. So, I see no decline in demand.

      Lastly, the lower production over the past 10 years when the price of gold was higher had nothing to do with price, but rather it was due to declining ore grades and the aging of the mines.


      • Yes Thank you for your response Steve. I saw the “supply meeting demand” comment did a “are we on the same planet” pause (and I am being polite.) I she has missed you import-export reports.

        Now if the supply meeting demand comment was related to base metal mining roll off…leading to a decline in gold ounces – there might be a point to be made.

        BTW Did you heer the comment of the Glen Core CEO on the huge paper copper short? Butler talks about here around 11:50:


        • It is even better that the price of gold is so low now and probably will be even lower. Miners reduce investment and the real squeeze will be felt in two years which will propell the prices even higher.

  4. I agree with the lady from the desert, even went to a 51 game ! The metals will shine when the friggin riggin is stop and true price discovery is allowed, you remember the “Free Market’.

  5. http://www.boerse-online.de/nachrichten/aktien/Chinas-Industrieproduktion-auf-tiefstem-Wert-seit-Maerz-2009-1000790100

    production in China is even more worse as 2009.Only new QE can solve this Problem?
    Otherwise we can get an gigantic crash at the stock market.

    Forget the increasing interest rate in USA.Rather a camel goes through a bottleneck.

  6. Steve, I though you may be interested in this. I have a netdania.com account. While looking at the silver chart today the lead story is from FXwire Pro Commodities posted @ 10:12:04 8/31/15 ” US mint American eagle coin sales in august fall 10.7% to 4.93 million ounces. It struck me as the prefect way to signal to the algos weakness in silver. I decided to google “us silver eagle fall 10.7% in august” to see what I would find. I found this article, below, appearing in several website…

    US Mint American Eagle gold, silver coin sales drop in August
    NEW YORK – US Mint sales of American Eagle gold coins fell 40% in August from July’s highest level in more than two years, as concern about a slowing Chinese economy lifted bullion prices above a five-and-a-half year low, government data showed on Monday.
    American Eagle gold coin sales fell to 101 500 oz, but that was still four times the sales in August 2014.
    Sales of American Eagle silver coins also fell in August, after prices dropped to a six-year low that fuelled demand in July, forcing the Mint to halt sales for nearly two weeks after running out of stock. Sales resumed at the end of July but have been under weekly allocations of roughly one-million ounces as the Mint ramped up supplies.
    American Eagle silver coin sales in August fell 10.7% from July to 4.93-million ounces, but this was more than double the 2.1-million sold in August 2014, Mint data showed.

    So what find interesting is the fact that FX Pro decided to take part of this article and use it as a bearish signal to the traders. So is this the 101 in how to keep a bear market healthy? But the other thought is that they went to the trouble of spinning a factoid from the US mint as bearish for silver because it is silver ending its bear market which is frightening to them,IMO

  7. Jesse’s Cafe did an outstanding job quantifying the problem : “1 SEPTEMBER 2015

    The Investment of the Millennium: ‘Pet Rocks’

    “Gold has worked down from Alexander’s time.

    When something holds good for two thousand years I do not believe it can be so because of prejudice or mistaken theory.”

    Bernard M. Baruch

    Who would have thought it?

    So why haven’t the precious metals been ‘working’ since they spiked higher in 2011?

    “We hypothesize that, having learned from the misadventures of the 1960s, the policy elites, well-versed in the practice of financial engineering and market manipulation, would have seen no need to dump stocks of government gold reserves onto the market, 1960s style, to keep the price in check.

    Instead, synthetic gold, sourced in pyramids of credit extended to bullion bankers by central banks with little or no claim on physical substance, have provided a more efficient, better-camouflaged form of intervention. COMEX synthetic gold and related over-the-counter derivatives are traded in macro strategies implemented by hedge funds, high-frequency trades, and commodity funds in pair trades with interest-rate, currencies, equity futures, or even more exotic offsets. The volumes traded are huge, and bear little resemblance to actual flows of physical metal.

    We suspect that shorting gold has come to seem like a riskless proposition as long as there is confidence in the Fed. Synthetic gold is the perfect substance for a carry trade: an easy borrow with very low carrying cost and little upside basis risk. Such a hypothesis, in our opinion, does much to explain the incongruity of a declining gold price while fundamentals for paper currency, and the U.S. dollar in particular, obviously deteriorate; while demand for physical gold has exceeded new mine supply for several years running; and while above-ground 400-ounce .995-gold bars located in London, New York, and other financial capitals (in cohabitation with speculative trading activity in paper markets) have steadily dwindled and disappeared into Asian financial centers reformulated as .9999 kilo bars.”

    Tocqueville Gold Newsletter 2Q 2015

    The physical market at some point is going to come bearing consequence for the schemes of the financiers.

    I suspect that when the ‘riskless proposition’ of shorting gold starts to more visibly unwind, most likely under some significant duress, we are going to see what kind of rot has been concealed, and the bottom feeders that have thrived on it, as when the tide goes out.

    This unwinding started in the spike in the metals after the financial crisis of 2008, but was held off by massive ‘currency interventions’ to ‘save’ the Western financial system in 2011.

    Gold rose in 2009 from about +150% to +775% at the end of 2010.

    The real longer term consequences of reckless monetary policy and irresponsible financial deregulation and a tolerance for massive frauds are still ahead of us.

    Perhaps I am incorrect in this. But nothing I have seen in the data makes me believe so.

    Gold is still flowing in large numbers from West to East, and the central banks are still net buyers.

    And once the bull market in metals resumes, which I believe that it will, the upside will be similar to the increase which was seen in the years from 2009 to 2011.

    Change is coming. That is the only certainty. At some point I may be sharing some more thoughts about how this change might manifest it, and what forms the new ‘closing of the gold window’ may take. ”

    Until these vermin are revealed they will go right on taking what is not theirs.

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