China May Become Top "Power Money" Consumer in 2009

With fewer than one ounce of gold per person that has been mined by humanity over the course of history, there are a lot of folks with severe exposure in any currency crises or collapse. The illustration above is an easy way to envision the pyramid scheme that has become the world economy. The question is, is your head up in space or are you down here on earth?

On a pure dollar basis, gold has been estimated to have a true value of somewhere between $1,500 and $2,500 right now. It has been discounted through short sales and other plays to help maintain the integrity of other investment vehicles.

This was attempted before where gold was pinned at $35 an ounce, however, dollars continued to be printed faster than gold was added to the stock. Therefore, those recognizing the arbitrage opportunity of purchasing gold exchanged their discounted dollar bills for the real deal. This caused a crises where in the early 1970s the gold window was closed all together and the US treasury would no longer exchange gold for dollars.

Trusting in the pure fiat system is tantamount to relying upon snake oil pitchmen as opposed to doctors in curing an ailment. China and India as the world's largest consumers of gold seem to understand its value. Listen to our founders and get educated.

All the perplexities, confusions, and distress in America, arise, not from defects in their Constitution or Confederation, not from a want of honor or virtue, so much as from downright ignorance of the nature of coin, credit, and circulation. -John Adams to Thomas Jefferson in 1787

Sino Gold Mining Plans to Double Production by 2012

By Jason Scott

Aug. 3 (Bloomberg) -- Sino Gold Mining Ltd., owner of China’s second-largest gold mine, plans to double production of the precious metal by 2012, helped by the start of new mines.

The Eastern Dragon mine, to start in late 2010, will produce an average of 90,000 ounces a year at a cost of $125 per ounce for at least five years, Chief Operating Officer Cobb Johnstone said today at the Diggers and Dealers conference in Kalgoorlie, Western Australia. He didn’t say what the targeted output was, or the comparison for the doubling projection.

“It starts to give us some pretty attractive margins,” Johnstone said of Eastern Dragon, in Heilongjiang province. “Gold price margins in 2009 should be close to $500 an ounce.”

China, where Sino Gold is targeting to start as many as five gold mines to add to its Jinfeng, White Mountain and Eastern Dragon projects, may overtake India as the world’s top gold consumer this year, the World Gold Council said July 24.

Sino Gold rose 2.8 percent to close at A$5.44 in Sydney trading. Gold has gained 8.3 percent this year, and traded at $954.83 an ounce at 4:37 p.m. Singapore time.

The company wants to cut production costs to $300 an ounce, Johnstone also said. The company produced gold at an average cost of $391 an ounce in the second quarter.