This Key Gold Producer’s Exports Just Fell 50%

Very interesting data coming out of one of the world’s gold production hotspots last week.

Peru.

April statistics were released for the country’s mining sector. Showing a startling shift in gold shipments out of the country.

During the month, Peruvian exports dropped 50% as compared to April 2013. For a total of 243,100 ounces–as compared to 483,800 ounces in the year-earlier period.

Production figures also showed a substantial fall during April. With total gold output down by over 116,000 ounces–equating to a 26% decline from last year.

Of course, there could be somewhat of a “one-off” factor in those numbers. With April this year having seen the Easter holidays–a time when the pace of work in Latin America often slows.

But the pattern of production declines–if not the scale–is apparent in Peru’s year-to-date data. Which shows that overall gold output during the first four months of 2014 is down 12% compared to last year. Representing a loss of over 200,000 ounces of supply.

Some of the reduction is coming from efforts to combat illegal mining in the country. Especially in the southeastern Madre de Dios region–where production in April fell by over 45,000 ounces.

But it’s not just this area where output is dropping. April saw production cuts at numerous mines across several of the country’s gold-producing districts.

This may in fact be further evidence that low prices are curing low prices in the global gold market. With Peruvian producers shuttering unprofitable operations–just as many other mines the world over have been doing of late.

In the case of Peru, this is an important observation for the gold market. Given that the country was the world’s fifth-largest bullion producer in 2013.

If supply here continues to fall, it will be one more factor helping to put a floor under gold prices. Keep watching this space.

Here’s to proper supply,

Dave Forest

dforest@piercepoints.com / @piercepoints / Facebook

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