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Gold/Mining/Energy : GOLD-XAU
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To: Don Green who wrote (851)12/23/1997 12:22:00 AM
From: rdww  Read Replies (1) of 1756
 
the POG will move to maybe $250 - but unlikely. There is not a producer in the world that is making $ on an all in cost per oz. So this can only continue for so long before production shuts down. So how did we get to this low point. Well the CB's - a couple of the smaller and as yet unnamed EU ones started selling before the EU gives birth. France + Germany stand by gold and will not likley allow the smaller countries to sell. Best to get it off now. (see Frank Veneroso conversation) So the selling that started last year at $350 and went lower affected mines - but they could survive. But now they have pushed Gold to the point that there will need to be more IMF bailouts if if drops much further. SA will erupt if the 100,000 worker are laid off as suugested if POG keeps going down. Peru will have problems and Indonesia is borderline to civil unrest. They were borderline when BXM erupted. How do you think they will handle not only IMF restrictions that they have now - but the loss of thier resource sector as well? Gold is not always mined by itself - so other types of mines will be affected and so will the workers.
The IMF will have to step in to help out and the IMF is out of cash and the US is not likley to agree to give them more next year.
In the past SA has loaned out it's Au in times of distress to back-up loans. So they are aware that Au has a place in a time of need. That's what it really comes down to .. au is not something that you trade every day. It's much like the proverbial nest egg. You keep it under the mattress or what ever hoping that you never need it. One day you screw up and you go to the nest egg and you use it because it's there. That is precisely what the a few of the CB's have forgotten. SOme think that it has become another item to barter. Time will come to pass and the peon's in these CB's - will realize that maybe they didn't need all of that gold - but keeping some of it wasn't such a bad idea. So we are near a bottom . No one will subsidize the cost of mining and CB's have come to realize that sales will hurt everyone and only continue to go lower. So there will be a period of pause before sales begin again in the $340 or so range I'll bet.

So relax Don - it may go down - but it's just as likley to go up one day. We're not all that much wiser than the rest of civilization yet.
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