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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: Arik T.G. who wrote (111281)	7/5/2001 7:15:55 PM
From: craig crawford	Read Replies (1) of 436258

>> All big producers have mines with different cash costs ranging from $120 to $230. They will halt production on the higher cost mines as soon as the price they recieve for the product is lower then the cash cost << yes we have already seen some higher cost mines idled or shut down. >> Unfortunately they will be losing money way before that, as total cost includes fixed costs. Producers will happily cover their hedges with the lower cost mines. If production from those mines is not enough, hey Economics 101! price has to go up. << only if demand doesn't fall in line with supply. or if supply is not met from above ground stocks. obviously my $200/oz scenario would require weak economic conditions and weakening demand for gold, on top of of some foreign currency weakness. >> Governments have been dumping their reserves by the tons for years, and still the '99 low held << in the face of strong worldwide economic conditions. now we still have dumping, but in weak economic conditions. also the '99 low has not held not in real dollar terms. you need to add about $15 to the 1999 prices to compare them to the price today. in real dollar terms gold didn't bottom in 1999, it bottomed at the start of april. >> On the effects of worldwide depression Industrial and ornamental demand will probably drop, << yes sir. >> but monetary demand will skyrocket as soon as the Dollar will lose some ground << hold on there just a second. who said the dollar was going to fall? what happens to your scenario if the dollar only gets stronger? >> Also when rates on currencies drop to depression levels, most shorts on Gold will have to cover. << maybe all the shorts will cover at 200! >> The '99 low held for one more session ;-> << not in inflation adjusted dollar terms ;-)

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