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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: yard_man who wrote (103622)5/21/2001 9:53:59 AM
From: Bid Buster   of 436258
 
an example of how mines are leveraged to the price of gold is say DROOY has a production cost of $200 an oz, at pog of 250 they earn $50 an oz.
now say gold goes to $300 an oz DROOY earns $100 an oz on production a 100% increase verses golds 17% increase..

thats just a rough example, useing hypothetical numbers.
some mines are better leveraged than others...the 4.5 leverage factor is based on the industry average...i don't recall where that came from, but it's been a rule of thumb for years.
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