Governments to Rob (ABX) (NEM) (AEM), Others?

Greedy governments, especially of the United States, Canada, Australia and Chile are looking at confiscating more of the earnings generated from profitable gold mining companies like Barrick Gold (NYSE:ABX), Newmont Mining (NYSE:NEM) and Agnico-Eagle (NYSE:AEM), rather than deal with the issue of out of control spending and making promises they can't keep.

Governments, which are the cause of the economic conditions around the world from not only spending, but allowing unregulated central banks like the Federal Reserve to endlessly print money, which is a major impetus for the rise in gold prices in the first place.

As Newmont CEO Richard O'Brien said, "When I sit down with governments, I say the headline is gold prices are up, but behind the headlines you need to understand costs are up and capital numbers are up as well."

Costs to find, finance and produce gold come in at between $900 and $950 an ounce, he said.

"That's even before we pay taxes," O'Brien added. "We're making a profit and we're not going to complain about it, nor are going to shirk our commitments to the communities. But don't think that gold prices are at $1,400 and costs are at $350. That's not where we are anymore."

While the gold miners attempt to make their case, it's not relevant. It doesn't matter how profitable they are, the governments are going after them in an attempt to weaken the gold industry, as it continually reminds people of their failures.

But even that aside, gold miners are built to make profits, and they are cyclical in nature, although the cycles can be longer than the usual business cycle of a sector, as the recent decade has shown.

Gold prices are volatile though, and government interference and greedy confiscation will slow down the industry from making investment and building it out to meet an already depleting supply.