

Bottom-line
“ASIC” in the context of gold mining is almost always a shorthand (or miss-spelling) for AISC — All-in Sustaining Cost. AISC represents the full cost of producing one ounce of gold. Because it effectively marks the industry’s break-even level, movements in AISC act like a cost-floor under the gold price:
• When AISC rises, the minimum price at which mines can operate profitably rises, supporting higher gold prices.
• When AISC falls, producers can stay profitable at lower prices, increasing potential supply and putting downward pressure on prices.
1. What exactly is AISC?
Component | What it includes | Why it matters |
---|---|---|
Cash operating costs | Mining, processing, site G&A | Day-to-day cost to pull ore |
Sustaining capital | Equipment replacement, tailings, mine development necessary to keep production flat | Long-term viability |
Corporate G&A & exploration | Head-office costs and near-mine exploration needed to maintain reserves | True “stay-in-business” spend |
Royalties & taxes | Government take linked to ounces produced | Varies with gold price and jurisdiction |
Unlike the older “cash-cost” metric, AISC captures everything required to keep a mine producing at today’s level, making it the benchmark analysts use to judge miners’ profitability.
2. Current AISC levels
• Global weighted-average AISC reached about US$1,456/oz in Q3-2024, a record high, driven by energy, labour and royalty inflation 1.
• Individual mines can be much higher or lower. For example, Galiano Gold (GAU) reported Q1-2025 AISC of US$2,501/oz after a plant shutdown, well above the global average 2.
• Top-tier producers such as Agnico Eagle (AEM) trimmed AISC to roughly US$1,183/oz in early-2025, showing that cost discipline still exists at the low end 3.
3. How AISC influences the gold price
-
Cost floor for supply
• If spot gold falls below the industry AISC, marginal mines shut, supply contracts, and price pressure eases.
• Historically, major bear-market lows (1999–2001, 2015) occurred just above the prevailing global AISC, underscoring the metric’s “floor” effect. -
Investment & expansion decisions
• When gold trades comfortably above AISC (as it does today with spot > US$2,300 vs. AISC ≈ US$1,450), miners expand production, green-light new projects and hedge less. Extra supply can cap runaway price spikes.
• Conversely, if margins compress, projects are deferred, limiting future supply and supporting prices. -
Market sentiment & valuations
• Rising AISC squeezes margins; investors demand higher gold prices to justify equity multiples.
• Sharp AISC increases can therefore pull gold equities lower even when the metal price is flat, but they also strengthen the “higher-prices-ahead” narrative for bullion. -
Regional & currency effects
• AISC is reported in USD. When local currencies (e.g., CAD, AUD, ZAR) weaken, dollar-denominated AISC for mines in those countries falls, encouraging extra output and moderating price pressure.
• Energy shocks, diesel prices and royalty regimes often push AISC up simultaneously across many regions, providing a global price tail-wind.
4. Key drivers to watch
Driver | Typical impact on AISC | Likely gold-price reaction |
---|---|---|
Energy (diesel, power) | 20-35 % of total cost | Surging oil ⇒ higher AISC ⇒ bullish |
Labour inflation | 10-25 % | Higher wages ⇒ higher AISC ⇒ bullish |
Grade decline | Lower ore grade ⇒ more tonnes moved per ounce | Bullish |
Royalty/tax hikes | Direct addition to AISC | Bullish |
FX moves (local currency ↓) | Lowers local-cost AISC in USD | Can be bearish if many producers benefit |
5. Putting it all together
- With spot gold well above the average AISC, current margins are healthy; this supports ongoing production growth and moderates upside spikes.
- However, the trend in AISC keeps edging higher (≈ +9 % YoY in 2024 1) due to sticky cost inflation. That rising cost floor is one of the structural reasons many analysts target US$2,300–2,500/oz as a sustainable range over the next few years.
- For stock pickers, companies that can beat the industry AISC (e.g., AEM) deserve premium multiples, while high-cost operators (e.g., GAU at US$2,501/oz after its shutdown 2) need either higher gold prices or significant cost improvements to re-rate.
Takeaway for investors
Paying attention to AISC is crucial:
• It sets the supply-side price floor for the metal.
• It tells you whether a miner is genuinely low-cost or simply benefitting from a high gold price.
• Rising AISC, all else equal, is bullish for bullion but mixed for gold equities—low-cost producers win, high-cost names could lag unless prices rise enough to restore margins.
