The Complete Story Of How Gold Is Mined And Refined

south africa gold mine

Gold prices have tumbled since their $1,900 peak in 2011. The yellow metal slumped into a bear market in April, and now prices are just above $1,200.

Investors have warned that the correction in gold prices has meant that miners are producing gold at cost or are losing money.

Last year, CNBC‘s Bob Pisani traveled to South Africa to show us how gold goes from particles to gold bars.

He followed AngloGold Ashanti’s gold mining process from start to finish. Workers there pull up 5000 metric tons of earth per day, which yields as much as 1,700 ounces in gold.

Pisani also visited the Rand Refinery, which has refined nearly a third of the gold mined since 1920.

In light of the recent sell-off in gold, we decided to revisit Pisani’s tour of the gold mine and see just how complicated and dangerous the process is.\


The Beginning Move Of The Gold End Game

Gold and Silver exchanges are going to be forced to become cash spot contract physical exchanges. Is this a market mistake, or a massive physical gold project of those who now own all the gold?

It is a project in my opinion that the knuckle draggers at the Comex are yet to figure out. If you are a successful knuckle dragger at the Comex you become a board member but remain a knuckle dragger intellectually.

The Comex will not wait until they have only one ounce left in the warehouse. They will once again change the rules of delivery and go to 100 percent margin. This is gold taking advantage of the premium of physical over Comex spot contract, their cash gold representation. I do not see this as a market accident but a well crafted plan to kill paper no gold contracts and emancipate physical to rise to prices once said here but never again.

Ask yourself these following questions again:

Where has all the gold gone?
Is this where all the gold in Morgan’s vault went?
Are the Gold Banks executing the Comex exchange?

Remember, sharks love to eat sharks until there is only one fast shark left.

This is the Death Rattle of the Comex exchange. It was originally falsely reported as scrap gold for refining. It is now more properly reported as follows:

“They added that it was likely that a client who had invested in the gold futures market had decided to take physical delivery of its gold bars in the US when the contract expired. The gold is most probably just passing through and bound for markets such as China or India. While there are refineries in North America, gold can be sent to different refineries around the world depending on prices or existing relationships.

One reason to refine the gold might be because there is a premium for a smaller bar sold in the retail industry in India and China.”

South Africa to refine $1.1 billion worth Gold for US
Tuesday, May 21st 05:42 PM IST

JOHANNESBURG(BullionStreet): South Africa’s largest gold refinery, Rand Refinery, also one of the biggest in the world, said it will refine huge quantities of gold from the US.

According to Rand Refinery’s chief executive, Howard Craig, the shipment of unusually large quantities of gold bound for the refinery (worth $1.1-billion) is just business as usual for the company.

He said it is nothing out of the ordinary as Rand Refinery does refining of gold and silver for Africa as well as the conversion of gold from various other countries, such as the US.

The company imports over 200 tonnes of gold per annum and its activities are not necessarily event or country specific,” although it does not source any metal deposits from conflict-affected areas, he added.

Craig said the company could not acknowledge or attest to any statistics or facts that had not been provided by the company itself.

The commodity movement was detected in recent United States trade data that showed South Africa’s $402-million trade surplus with the US in January had turned into a $689-million deficit by March.


The Smartest Dictator of Them All Seizes All the Gold

You’ve got to love this guy, Hugo Chavez.

The President of Venezuela had already nationalized the banks and the oil industry. Now he’s going after the gold.

Chavez took to state television yesterday to tell his people that the gold industry is “run by the mafia,” so “We’re going to nationalize gold. We can’t keep allowing them to take it away.”

The Venezuelan leader said he would nationalize gold through a decree that he will issue in the next few days. Chavez said, “We’re going to convert it (gold)…into international reserves because gold continues to increase in value.”

Venezuela has large gold deposits. Gold mining in the country accounts for the production of about four tonnes of gold per year. Last year, Chavez told gold-mining companies that they could export 50% of the gold they produce, with the other 50% going to Venezuela’s central bank. Now he’s taking it all.

My simple interpretation of Chavez’s actions is as simple as Chavez himself: he has witnessed the value of the U.S. dollar plummeting against other world currencies since early 2009. He has also been witness to an outstanding rise in the national debt of the U.S., the downgrading of the U.S. credit rating, and the spectacular rise in the price of gold. He thinks he sees the writing on the wall. He may be right this time.

Michael’s Personal Notes:

Boy, was he ever wrong!

I’m talking about George Soros. His Soros Fund Management LLC sold 99% of its gold holdings in the first quarter of this year, as Soros was calling gold at that time “the ultimate asset bubble.” He was very wrong. Gold bullion has risen more than $400.00 an ounce, or 30%, since March 31, 2011.

I can understand Soros’ concern. Speculators are getting into the action big time. Options on the Comex to buy gold in the future at higher prices are the most popular and widely held. Since speculators often catch the tail end of a move, so much interest in gold call options is unsettling.

But let’s face the facts, after such a great year for gold bullion prices so far, I don’t think any of my readers would be disappointed to see a major correction start. I hope they would use that opportunity to average down their gold investments, as I would.

On the positive side, in respect to real demand, fear about Europe’s banking system with sovereign debt issues persisting is resulting in real demand for gold. Rand Refinery Ltd., which runs the world’s biggest gold refining operation pumping out the world-famous Krugerrands, can’t make the coins fast enough to supply demand.

Yes, speculators are in the options pits big-time betting that gold will go higher, which is worrisome. And demand for gold coins is also rapid.

Like all healthy bull markets, a good correction once in a while is needed to take the speculators out of the market. But don’t let a pull-back or correction in this long-running gold bull market deter you from looking at the glass as being half full, not half empty.

Where the Market Stands; Where it’s Headed:

We started the month with some big 400- to 500-point drops on the Dow Jones Industrial Average and with Standard and Poor’s downgrading of the U.S.’s credit rating. Investors got nervous and dumped their equity funds. And, just halfway through the month, stocks have almost recovered to almost breakeven for 2011. Another lesson in the risks of following the herd.

I continue to believe that we are in a bear market rally in stocks that started in March of 2009. That bear market rally is long in the tooth, but still has life left in it to drive stock prices higher in the immediate term.

What He Said:

“The conversation at parties is no longer about the stock market; it’s about real estate. ‘Our home has gone up this much’ or ‘Our country home has doubled in price.’ Looking around today, it would be very difficult to find people who believe that one day it could be out of vogue to own real estate because properties would be such a bad investment. Those investors who believe a dark day will never come for the property market are just fooling themselves.” Michael Lombardi in PROFIT CONFIDENTIAL, June 6, 2005. Michael started warning about the crisis coming in the U.S. real estate market right at the peak of the boom, now widely believed to be 2005.