I remember a while back when gold was at $600 that a common cost to mine that was mentioned was $300/ounce. In this case, profit would be $300/ounce.

Of course this varies widely depending on all the variables to mine...wages, energy, equipment, type of mine, depths, etc etc.

Keeping this real simple, lets say that you keep applying the same percentage to both "cost to mine" and the "gold" price.

Energy and gold both rise 50%:

Gold 1.5 X 600 = 900

Energy 1.5 X 300 = 450

Profit = 450

Do this again:

Gold 1.5 X 900 = 1350

Energy 1.5 X 450 = 675

Profit = 675

The point being that if energy costs rise at roughly the same rate as the gold price does, then gold mining still continues to be more and more profitable.

Of course I am assuming that energy is dominant in figuring the cost to mine here. It is a huge factor. Mills, other equip., labor cost etc are not going to rise anywhere near the rates energy and gold will. I think all the worry about not making a profit as gold shoots skyward is unfounded.

Got Tyhee?