> But production can be (and is) lowered very easily. You simply cut one shift
Simple ? Well, I hate to sound like a broken record, but gold peaked near $415.20 in February 1996 and it appears 2001 will be the 6th consecutive annual increase and another record. Common sense tells us if prices rise you increase production, and if prices drop you decrease production, but the reality appears that one increases production to reduce unit cost to cope with lower prices. I know it's a silly race to the bottom and a liquidation of assets, but we have seen it happen. Common sense does not seem to apply to the mining business ;)
I have not done any analysis of the zinc industry, but it would not surprise me if they have also tried to ramp production in an attempt to lower production costs faster than the market price. Now going to USGS site (and others) for some zinc data.
To keep on-topic (Hi DougAK), I started 2001 looking for sideways gold (275+/- 25), so the kind of gold stocks that I liked were those that could make money based on $275 and did not depend on higher gold prices. Firms like Agnico Eagle, Goldcorp, and Meridian appear to have met that profile - good assets, huge production increases, low per ounce costs, great cash flow, and even earnings. Wonder if there are any other gems out there, or do we have to buy marginals (Kinross, Echo Bay, Durban, Cambior) and pray for disaster leading to higher gold prices? |
