Hi Ken. As a long suffering gold bug I realistically have to agree with you. We can complain, rightfully or not, about conspiracies and manipulation, but the fact of the matter is - who is going to invest in an industry whos' major producers have committed themselves to selling short their product, driving it's price down, and with that, the value of their shares? What sort of Trojan Horse is this?
As I've said in the past, I agree that producer hedging is helping to kill the gold sector. Every forward sale of an ounce of gold leads to that ounce being sold after it's borrowed from a cb. This, of course, makes little or no sense for either the producer or the cb. What good does it do a producer to sell an ounce forward at $290 that will cost him closer to $400 to replace? Surely its' intrinsic value has to at least be it's replacement value? And what good does it do a cb to lend this ounce out, in the name of return, when it loses five dollars in capital for every one dollar in interest it earns? But there you have it. Alice in Wonderland. |
