$1,000 Gold Scenario Would Cause Industry Serious Trouble

Kitco News - With gold companies having completed the reporting of their second quarter results, Brent Cook, a famed geologist said one thing stood out besides the dire numbers. ‘On the whole, they are still free cash flow positive,’ said Cook in an interview with Kitco News on Tuesday. ‘They are doing that by cutting their sustaining costs – so basically by cutting sustaining costs they are not sustaining their business - down the road, there are problems coming up,’ Cook warned. The second-quarter earnings season for the gold miners began July 29. Gold mining companies have been crushed by the recent drop in the gold price. The metal averaged just under US$1,200 an ounce in the second quarter, which ended June 30. But it later crashed to below US$1,100 in July due to a strong U.S. dollar, which is rising on expectations that the U.S. Federal Reserve will raise interest rates in September. Should gold fall below $1,000 an ounce, Cook said it will become incredibly tough for miners. 'Most of the major mining companies are in serious trouble if gold falls below $1,000,' he said. December Comex gold was last up $3.60 at $1,107.60 an ounce. September Comex silver was last down $0.002 at $15.29 an ounce.