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Gold/Mining/Energy : Gold Price Monitor

GDXJ 106.70

-0.3%

Dec 5 4:00 PM EST

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To: teevee who wrote (24964)	12/27/1998 4:54:00 PM
From: Bob Dobbs	Read Replies (1) of 116796

teevee: I don't know where you get your information. <...and mining companies keep delivering more to the various piles every year and central banks keep buying it-so...the real physical market is glutted with oversupply.> Has there been a net increase or decrease in central bank stock and by how much over what time period? Can you give a tonnage magnitude of this oversupply? <Metal loans help offset central and commercial bank purchase costs of the steadily increasing stream of newly mined metal, provide a return on existing stockpiles of metal, and support prices at artificially high levels, as institutions who borrow gold for writing covered options and futures contracts are really playing zero sum games (less commission and lease rates) and have no intention of taking or making delivery. In brief, in addition to providing liquidity to gold miners and smoothing prices for users of gold in manufacturing, gold loans help cushion the gradual fall of the price of gold to it's historic price range-about 30 times silver (that is a price target of well below US$200 per ounce folks). This is humorously being underwritten by paranoid gold bugs.> How can a gold price of $200 provide "liquidity" to a gold mine whose cost is perhaps $300 to bring it out of the ground? Why would they bother staying in business, especially if the price remains long around $200? What's "being underwritten" mean? I'm not a gold bug, just curious. Bob

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