To your first point,...gold has spent most of the last 100 years and more below US$100 per oz,...that's nominal. The point was simple,...gold could go there again given the correct supply and demand scenario,...that's it,...you seem to be wanting to read a lot more into what I said. You have also dragged that statement away from its context, which I believe had something to do with Barrick's excellent management over the last 14 years compared to most of its peers. As they are hedged, they will still make $360 per oz revenue on their hedged production, and about $190 per oz profit even if gold goes to $100 nominal per oz.
http://www.siliconinvestor.com/readmsg.aspx?msgid=17282384
To your second point about inflation and the value of the dollar vs gold. Think on this,...if you put $25 dollars in the bank giving interest at prevailing historical interest rates, and let it compound over one hundred years, how much would it be worth? It might have doubled every 20 years (some more, some less, this assumes an average 4% per annum compounded) so your $25 becomes $800 in one hundred years (before you bring in tax, this would not have attracted tax for most of the 100 years, if at all, because the annual interest would have been below tax minimums for those years interest income was taxed at all).
Now gold started out at $25 a hundred years ago, but costs money to store, insure, secure, reassay and weigh and makes no interest. It is now worth $300 but how much should we take off for storage etc. The central banks estimate that charge to be around 0.5%+ per year from something I read on the gold thread a year or two ago,...so $300 - (0.5% per year for 100 years),...could be cut by one third so say $200. Now you could go and hide it under the bed and save the costs of storage etc., (the central banks don't) but you run the risk of someone stealing it and you losing it all.
I can understand why the central banks want rid of the yellow curse (gggggggggggggggggggg)
And now for something even more interesting,...
http://biz.yahoo.com/rb/020414/minerals_gold_barrick_1.html
Sunday April 14, 7:57 pm Eastern Time
Reuters Business
Barrick to sell half gold output this yr at US$365
MELBOURNE, April 15 (Reuters) - Barrick Gold Corp (Toronto:ABX.TO - news) said on Monday it will sell half its gold output this year at a minimum price of US$365 dollars an ounce, with the balance to be sold on the spot market.
``That extra gold exposure to gold prices means that for every 25 dollar increase in the gold price we will see earnings and cashflow increase by 70 million this year alone,'' Randall Oliphant, chief executive office of Barrick said in a speech to be delivered later on Monday in Melbourne.
For 2002 Oliphant said Barrick will mine about 5.7 million ounces at an average cash cost of US$167 dollars an ounce. Oliphant said gold miners worldwide needed to increase marketing efforts to support any long term increase in the bullion price.
``Our industry can no longer ignore the role of modern marketing in driving consumer demand than it can act in isolation from the forces of consolidation,'' Oliphant said.
Over the last year or two some of the world's largest mining companies have merged in a bid to increase their mine reserves of gold.
In February, U.S.-based Newmont Mining Corp (NYSE:NEM - news) compleated a A$4.2 billion dollar ($2.24 billion) takeover of Normandy mining which was Australia's largest gold miner.
Barrick last year merged with Homestake Mining to become one of the world's largest gold mining companies with a market capitalisation of around US$10 billion.
About 55 percent of its production comes from mines in the United States and Canada. Barrick, like some other gold miners, sells a portion of its output at pre-fixed prices, a practice know as gold hedging.
The bullion price, which averaged around US$273 an ounce last year was last bid at US$300.80 an ounce, underpinned by the latest tension in the middle east and the higher oil price.
Barrick shares closed at 28.18 Canadian dollars on Friday.
($1=1.872 Australian Dollar) |
