Are the majors trying to bankrupt the juniors? Hummmm....
FWIW I found the following on the PDG thread at the Yahoo web site.
Emory
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messages.yahoo.com@m2.yahoo.com
I posted this at TVXU
by: profit_of_babble_on (32/M/Vancouver,Canada)
1926 of 1932
I figured it would be fitting here as well. Comment welcomed.
By the way TVXU is one meeting place for gold bugs, you are welcome to visit and join if you see fit. post.clubs.yahoo.com
Anyway, on to business...
I was thinking about how all these gold companies( namely ABX and PDG) have all these gold hedges in the $350 - $400 range if I am not mistaken, then I thought,"Hey, this is stupid. Why would they hold these hedges, when they could just buy gold at cash today for $290 an close out these hedges for upwards of a %30 INSTANT return?". Not only would this make them that return, BUT it would also remove some gold from the market, and increase demand, thus driving up the price of gold on all their other reserves which would make their whole profit picture more valueable. I pondered this(because with such an important question it is VERY important to ponder. Even more so than reflecting etc.) for some time before I realized, THAT the ONLY reason why they would not close out those hedges with such cheap gold is if they think they can buy even CHEAPER gold plus mining assets in the form of broken juniors with which to replenish that gold!
So I still contend that these hedging programs are really creating an incestuous mess that is intentionally designed to depress the price of gold and BREAK the juniors. So how low do you think they intend to go? I contend that they intend to go AS LOW AS IT TAKES TO BREAK THE JUNIORS. I almost believe that ABX and PDG and other hedgers are in some sort of collusion to absolutely dominate the market share of the gold industry, and this is the method by which they are doing it (though they might not even be doing it consciously).
So by holding these hedges, they are keeping buyers out of the market, and DESTROYING the profitability of the sellers.
I believe that they WILL close out their hedges. THE DAY they have the last bankrupt gold mining junior in their portfolio's, which will pop the value of gold almost overnight.
The question is, HOW LONG WILL THIS TAKE? |
