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Gold/Mining/Energy : BRE-X, Indonesia, Ashanti Goldfields, Strong Companies.
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To: Method who wrote (7339)3/18/1997 11:31:00 AM
From: bigdude   of 28369
 
Barring wholesale liquidation by banks of their gold holdings, gold can only drop so far. That is, there are a large number of high cost producers operating worldwide, when gold drops below their cash cost of production for extended periods, mines will be shut down. Not to mention the negative impact on new mine development which will take into account the CAPX factors. This will be especially the case in South Africa, where mining companies are struggling to reduce labour costs, which is one of their largest input costs. It will be interesting to see how Busang and other large discoveries will impact the economics of gold mining worldwide. My belief is that there will be more major low cost discoveries which will continue to put lots of pressure on high cost producers, but there is a point where gold will stop falling once capacity is shut down. I wouldn't own any of the crappy high cost producers at this stage of the cycle.

Just my thoughts,

Bigdude

P.S. The next large gold discovery is just around the corner, there are just too many cashed up juniors drilling the hell out of this planet for a discovery not to be made. It will be interesting to see if the Golden Rule structure extends to depth, if it does, it will be the next big one. Also look to the juniors in Indonesia following granting of 6th generation CoWs.
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