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Gold/Mining/Energy : Gold Price Monitor

GDXJ 113.74

-1.2%

4:00 PM EST

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To: Rarebird who wrote (35669)	6/22/1999 2:32:00 AM
From: PaulM	Read Replies (1) of 116836

Weak Prices Threaten Normandy Gold Mines iht.com P.S. Isn't the current policy toward gold bizarre by any standards? Assume the CB's want to unload EVERY ounce because gold is "demonetized." Would it not have made more sense to unload in orderly fashion, keep POG at $310 or so, fill the supply deficit at that level, and allow many more mines to survive? Alternatively, if you believe that gold was managed lower to preserve the strength of the dollar, and by extension all currencies, how can the CB's expect to maintain that goal if the price is so low that supply is restricted? As it stands now, a) exploration expenditure has steadily decreased since the end of 1997; b) huge amounts of future supply have been sold forward and are already accounted for (a situation unique to gold and silver among commodities); c) to reduce cash costs to meet low price pressures in the short term, the life of many mines has been reduced longer term; and d) these and other factors have just now begun to result in the first reduction in supply this decade in 1st Q 99. Since then, the price has fallen farther. Structural changes such as these don't turn around overnight, even in the face of a higher price. The "market" is telling us it wants less supply for a long time. I suspect the CB's should have been more careful what they wished for.

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