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Gold/Mining/Energy : Gold Price Monitor

GDXJ 93.03

+3.0%

Nov 7 4:00 PM EST

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To: goldsheet who wrote (63253)	2/3/2001 10:23:19 AM
From: russwinter	Read Replies (1) of 116753

There is a good chunk (do you have an estimate?)of what could be called "back on the radar screen" ounces that will be a true reserve at sequentially higher prices. IMO those reserves may not be developed (at least quickly) because the poor financial condition of the majors may not allow it, and because operational talent is not easily available to develop and mine it. I'm not so sure that there will even be a rush to hedge reserves at higher prices either. So there could be a pretty substantial time lag present in the price elasticity of gold while capital and labor recoups. A good recent model of this is the energy business. There is a backlog of targets, but it's tough and expensive to hire crews and lease equipment. In fact those components are just not available. It appears there has been a quick little unsustainable blip in output initially from some existing fields, but then that fizzles because the basic energy infrastructure can't support it and needs to be retrofitted. That will take several years. For an in depth analysis see Marshall Adkins (Raymond James analyst) work; stockhouse.com Further because of the heavy handed "hearing footsteps" manner that gold has been leaned on and I believe manipulated, there may be a particular industry specific hesitation to make new production commitments even at 300-350. I'm seeing a different set of issues in the resource equation that's different from the past. The whole "New Economy" mindset has effectively gutted and neglected the entire resource sector. And now it's time to pay the piper. That's why I see this as a stronger, more sustainable move than most observers. I also see gold as having the potential to create MORE demand (unlike other commodities)at higher prices because it could become a speculative instrument. It is the type of asset that historically has captured the human soul in incredible ways. I often think most people just need a green light on this one. If you doubt it, read Peter Bernstein's The Power of Gold, "the history of an obsession".

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