They use a lot of oil in the process of extracting gold. Do you think the oil being so much cheaper now than it was a year ago could lead to a drop in gold's prices because mining it is cheaper or will the miners just pocket the difference?
That is the thing about oil. When oil is cheaper, it makes almost everything else cheaper, including gold. Not my area of expertise, but I don´t think oil would be a signficant part of the cost of mining gold. I am sure it matters, but not enough that it would cause the price to go down because of cheaper production costs. And the reason is because while it might be slightly cheaper to mine gold, there is also going to be more demand for it because of buyers being able to use it cheaper because of their own low oil prices.
I tend to agree with what you are saying. Fuel costs are lower which should mean the price of gold should drop some. However my prediction that the average gallon of gas will be $4.50 by 2017, but that is just my opinion. We can't have a good thing for too long.
The amount of gold produced is so low compared to how much already exists on the market, production has about no effect on the price.
