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Strategies & Market Trends : Strictly: Drilling II
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To: Art Bechhoefer who wrote (23593)12/17/2002 1:40:43 AM
From: t4texas  Read Replies (1) of 36161
 
will rogers said, "... they ain't making any more of the stuff." the gold commodity isn't like a manufacturing lowest cost producer with the higest quality thing. fcx can't satisfy the demand for gold out of its copper/gold mine. they ain't making any more gold, so as the price goes up with demand other marginal producers can get into the biz.

let's extend this to an industrial metal, e.g., copper. if there were a mine in the world that could produce copper at $0.05 per pound but could only satisfy 10% of the world demand, you can easily see that higher cost producers would get a good share of the biz. so even though the lowest cost producer of copper could make lots more profit than the other producers, the other producers could still play in the game even at much higher costs.
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