I just love watching the management of the gold producers squirm. As I stated over and over the last several years, these managers lack the sophistication to operate a listed company and should be removed. Forget about closing out existing positions, how about limiting new supply by not increasing production. Every other commodity producer does it, why not the gold producers. Yet they react to poor market conditions like the tin pan rulers of a third world country. I need mo money, produce more and more and more. Unfortunately, this increased production gets a smaller and smaller price in the market. The situation is unique in the history of a market place, increase production and further increase supply by borrowing and selling existing above ground supplies. As the price continued to decline last year, the call went out to the producers, "Man the Shovels, dig, dig, dig. And dig they did, with the only interruption, the arrival of a bullion banker who wined them and dined them into further silliness, loading them up with short term puts and long term calls. Way to go guys. They are pathetic, and I am not optimistic about the current rise in the price of gold. To remain above 300.00, initially, the producers are going to have to support demand by closing out some of their positions. If they do not do this, the retail buyers of gold will exit the market, knowing that the price of gold will fall as demand dries up. The producers could support demand for years before they make a dent in their short positions. Will the gang who could not shoot straight be up to the task. This is a difficult time for the big time managers of the producers, do I pick up the shovel, the fork, or a pen. Time will tell.
Ken |
