Ken: Your latest comments regarding the suitability of gold as an investment come to me as a surprise.
How can you claim that gold is such a bad investment universally when your overwhelming thesis for many months has been that the gold companies and their retrograde hedging policy are largely responsible for the low gold price? I agree with you there at least in part.
What I don't agree with is your assertion:
"To restore gold value above 300.00, I believe it will take a catastrophic event that will have to shake the world."
While sufficient, a catastrophe is not necessary to raise the gold price. It will rise eventually, all other factors being equal, because the gold loans will have to be repaid with physical metal at some unknown point in the future.
Bob Johnson's analyses, while accurate, nonetheless do not address this key point directly. Issues of technology improvement, supply increases, etc. are only gradual, moderating factors, relevant over periods of 10-20 years. The central issue confronting the gold market in the last 3 years has been the plunge of the gold price in the face of an overwhelming SUPPLY DEFICIT of over 500 tons and perhaps as large as 1500 tons per year.
There can be only one factor which explains this phenomenon, and that is the overwhelming mobilization of central bank gold through loans, in a financial form largely hidden from the market. It is NOT explainable by Placer Dome decreasing their cash costs by $13/oz.
In fact, Bob Johnson makes no mention whatsoever, in any comments on this thread to my knowledge, of the status of these gold loans, and certainly of their relevancy to the gold price. When I asked him directly about these matters in an earlier post, he simply ignored me.
Bob |
