Booms, Busts, and Recoveries Message Board

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Strategies & Market Trends : Booms, Busts, and Recoveries

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To: Maurice Winn who wrote (15605)	2/24/2002 8:52:01 PM
From: AC Flyer	Read Replies (1) of 74559

Mq: Buying the metal or the index will likely be a not-so-great idea. It's a game of figuring out who has the lowest production costs. I guess that would favor the newer/smaller players. Though apparently Freeport-McMoRan's operations in Iryan Jaya have cash production costs under $100/oz. I met the GM of this operation in Jakarta in 1994 when I was working for GE. He said that the lack of infrastructure in Iryan Jaya was a huge problem, but the quality of the ore made the effort worthwhile. Maybe the so-called "worst case" scenario of $250/oz. gold isn't so unlikely after all. At $136/oz. average cash production cost, $250/oz. would maintain the historical price/production cost spread.

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