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Does gold production by marginal mines compare to 'production' by central banks?

Section: Daily Dispatches

11:57a ET Wednesday, January 14, 2015

Dear Friend of GATA and Gold:

The Perth Mint's Bron Suchecki argues today that gold's price is being kept down in large part because too many marginal mines remain in operation.

Suchecki writes: "We need a much, much lower price to really kill this potential supply but this hasn't happened. We haven't seen large numbers of bankruptcies or care-and-maintenance mothballing occurring."

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Well, maybe. But how does metal supplied to the market by marginal mines compare with what has been called "synthetic" metal supplied by central banks and their bullion bank agents -- "paper gold"? Of course the volume of "paper gold" in the market has been estimated to exceed the volume of real metal by a factor of as much as 100.

So what is the real "marginal" supply here? Does it come out of the ground, extracted with great effort and expense, or is it created effortlessly and largely electronically by central banks, which, as Federal Reserve Chairman Alan Greenspan told Congress in 1998, "stand ready to lease gold in increasing quantities should the price rise"?:

While central banks and bullion banks are not as transparent about their "production" as mining companies are, overlooking central bank "production" while disparaging the production of marginal mines is straining at gnats while swallowing camels.

Suchecki's commentary is headlined "Gold Price May Be Affected by Marginal Miners Not Going to Company Heaven" and it's posted at his Internet site, Gold Chat, here:

While the gold price also may be affected by central banks not going to central bank heaven -- or elsewhere, as the case may be -- it remains exceedingly hard to get respectable people to discuss that part of the market.

CHRIS POWELL, Secretary/Treasurer
Gold Anti-Trust Action Committee Inc.

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