Mark Twain famously quipped that a miner was a liar standing beside a hole in the ground.
In practice this has not been so far from truth. A good many producers were over-promising margins the past few years by under-reporting break even costs–not using full cost accounting. As the price of metals continue to plunge, projects and producers have been burning cash at a voracious rate. Equipment, inventory and companies will need to be liquidated to pay creditors. Ironically, the metal proponents who assured the world that cash was trash, are now increasingly desperate to raise it.
Bloomberg reports on dropping gold prices and what that means for production. Here is a direct video link.
As the price of oil declines, its probably safe to say that many oil producers have also been under-reporting their costs and are burning through cash faster than currently believed…
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