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Strategies & Market Trends : Booms, Busts, and Recoveries
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To: KyrosL who wrote (37106)8/11/2003 7:02:49 PM
From: energyplay  Read Replies (2) of 74559
 
I would like to agree with Kyros in a slightly different way - I would expect gold to be 2000 oz in 10 years, but most of that gain might occur in the LAST 2 years. Central bank selling and forward selling might surpress gold's price gains under inflation for years, followed by an explosive return to the mean.

Meanwhile, energy, industrial metals, and some other assets might track inflation more closely, or even get ahead of inflation.

His point about production cost is also important - the heap leaching process means that lower grade, widely disseminated ores can be utilized as the price goes up.
The amount of available ore at these lower grades tends to increase at a very rapid expontential rate as the grade goes lower. This creates considerable elsticity on the supply side, but wtih a number of years delay for mine expansion.

Platinum group metals have much less of this problem, the ores tending less to wide disemination, and there is no recvery process with the economics of heap leaching. Big issue with PGM is their dependence on the automotive catalyst market, and the inventory overhang from recycling catalysts. This does create some nice and potentially profitable industry cycles, however...

By the way, Kyros is the one who brought RRI to the boards here....
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