Doug, those questions are way beyond me. I have found that in a very complex problems, answers come easier if you don't sweat the small stuff and look at the bigger picture. If its still not clear, you have to be really good to figure it out with the details.
The simple realization is that gold is trading near its lows, the US dollar is trading near its high. Low gold prices are reducing exploration expenditures, which inevitably leads to lower gold resources which leads to reduced production. Oddly enough, the initial decrease in the price of gold leads to a temporary increase in production as producers high-grade to keep their operations in the black. Short term solution, and in the end, can kill a deposit.
Supply of dollars are substantial, and production of dollars can increase substantially, but Greenspan has been a miracle worker using interest rates. Any substantial weakness will lead to an interest rate induced contraction in the money supply.
I really can't see much beyond this happening. As far as gold goes, if the big guys are buying it in hundred million or quarter billion dollar lots, then I'd like some too.
Dave |
