⛏️ Gold's touching $2,000 an ounce, again
This past week gold crept over $2,000 an ounce for the third time since 2020.
As commodity producers we're slaves to commodity prices. Traditional gold miners are killed by low gold prices or high fuel prices. Bering Sea dredgers aren't nearly as sensitive to the price of fuel since operating on the water means, pound-for-pound, we can move equipment and dirt from point A to point B very efficiently.
But the gold price matters deeply to us all.
I have no idea what the price of gold will be next year. If you look at a 30-year chart the trend is up and to the right, and I believe it will generally follow that over a long period of time. But there are decades (say, between 1994 and 2004, or 2012 and 2022) where gold advances very little overall.
Then something breaks, and it screams higher.
There's a famous saying in finance: "Don't confuse genius with a bull market."
I think that's perfectly applicable to the gold business, since for all our "independent, live-off-the-land" sensibilities, it is an industry that's very closely tied to global finance.
Many good miners might mistake themselves for geniuses because their entire career has seen gold screaming from $1,100 to $2,000 an ounce, providing a huge tailwind for their business. And many competent miners might feel like failures when really they're at a historic low in commodity prices, when in reality no one is making money no matter how good they are.
Even though I have no idea where the gold price is going, it seems clear that it has wanted to stay high, and volatile, for the last 3 1/2 years. A strong US dollar and rising interest rates - two things that tend to be bad for gold prices - haven't been able to bring prices down.
Rallies in the price of any asset tend to happen when "bad news" doesn't move the markets down anymore. So I think we have about as good a chance as any point in history to see a pretty strong gold rally in the coming years.
That said, I wonder what it would take to see another gold rush in Nome. The last one (check this video we made about it) in 2012 was driven by a combination of gold prices tripling in like 8 years and the premiere of Bering Sea Gold to over 3 million people.
That means 1% of the entire US population watched it live. That's not even counting the rest of the season, or reruns!
Given those numbers, it's surprising that the gold rush to Nome wasn't even bigger than what we saw. I wonder, would a rush occur if gold shot up to $2,500 an ounce? What about $3,000?
I think we'd need at least a 3-handle to really see the Nome harbor get really crowded again, especially considering recent cost inflation. Everything seems twice as expensive as it was in 2019.
The other question is, how do you play it? Do you try to sell out at the top? Guys could sell old junky dredges in 2012/2013 for astounding amounts of money. I know, because that's when Emily bought the Eroica - which was a certified piece of junk until she got her hands on it. In a normal market you can barely give dredges away, which is why so many of them are just sitting rotting in the harbor.
What if gold goes the other way? Under $1,500 an ounce we would not be very happy campers. That would eat into most of our profit, even in a great season. You make the choice to ride it out, I guess, or throw in the towel.
Either way I'm just glad it's knocking about $2,000 again. Keeps us firmly in the game.
Have a great weekend!
Alex
PS - We only have 2 Gram Eroica Paydirt left for sale until we restock.
Good news is I packed orders yesterday, and I'm packing more today. We should be ready to rip with more inventory by the holiday shopping season, along with a couple exciting new products!
All of our paydirt contains gold recovered from the Bering Sea by our team on the Eroica and the really fine gold has been screened out, so you only get nice chunky 30+ mesh gold flakes!
Don't Forget to use the code BSPD10 for 10% off ANYTHING in the shop, including gold, with your first purchase!
That's it for this week's newsletter. Drop me a line at Alex@BeringSeaPaydirt.com if there's anything you think we should cover.
Until next week!
Bering Sea Paydirt
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