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Gold/Mining/Energy : Gold Price Monitor
GDXJ 126.27+3.5%Jan 12 4:00 PM EST
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To: Ken Benes who wrote (48071)2/5/2000 10:58:00 AM
From: russwinter  Read Replies (3) of 116853
 
"will the producers support the price of gold by purchasing non mined gold filtered into the market to close out their existing short positions?"

Very key point. Some of the stronger companies may, especially on gold hedged at prices above $400, or where they are vulnerable to margin calls (out year deliveries that just can't be supplied with production). This would in effect be a bullish trading play on their part. That is basically what Goldfields did last fall on their purchase from BOE.

However, I'm not as optimistic on this as the rest of the bullish equation, for the simple reason that the industry is financially weak, and such transactions conducted on a meaningful scale would require considerable capital. Indeed I kind of expect some of these clowns to wake up some morning out of business. Then how will the gold be delivered on the contracts?
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