Mine Closures Imminent as Gold Prices Continue to Fall

Gold bullion okc

Tumbling precious metal prices—pressured by a surge in the U.S. dollar—have many investors asking the same question: Is now the time to buy gold and silver?

The price of gold is down more than a third over the past three years, while the dollar has risen to four-year high. Reuters reported as of Sept. 25 that gold prices are low enough so as to force producers to reduce output or shut down altogether.

If the price of gold falls below $1,200 a troy ounce (31.1 grams), extracting the gold may simply become unprofitable. This week the commodity was at $1,208.36 a troy ounce, a nine-month low.

In the last 18 months, mines all over the world have already struggled to cut costs, some suspending output.

Citibank estimated last month that it cost, on average, $1,350 to produce an ounce of gold in the first half of 2014, making the current prices unsupportable from a mining standpoint.

This affects not only those trading gold bullion on the commodities market, but also those who own stock in mining companies.

Retail Gold and Silver Sales

Retail gold and silver sales, however, continue.

The market supports both players who buy and sell gold jewelry, generally for melt-down purposes. These transactions are generally seen as win-win situations, since the sellers are generally laypeople who are able to sell platinum or gold jewelry that is broken, or old coin collections, receiving a profit on something that was previously worthless to them.

Other gold buyers are private citizens taking advantage of current low prices and counting on the economy weakening in the future, sending precious metal prices back up.

Your turn: Do you think it’s the right time to buy gold and silver? Do you have advice on how to buy gold? Are you selling before prices drop any lower? Share your strategy in the comments.

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