If it costs a producer $1500 to mine an ounce of gold and the price rises from $2000 to $2100, their profit jumps from $500 to $600 an ounce. In this case, a 5% increase in the price of gold should lead to a 20% jump in profits.
Several factors have eroded profits for gold producers:
1. The easy-to-reach, high-grade deposits have already been mined
2. Most of the input costs for gold miners have increased
3. Safety is taken far more seriously than it used to
4. The environmental impact of mining is also taken more seriously
5. Most producers have stopped or reduced hedging in the last decade
All-In Sustaining Costs (AISC)
AISC includes the costs over the life of a mine, including explorations and capital expenditure.
Source: Simply Wall Street
