International Precious Metals (IPMCF) Message Board

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Gold/Mining/Energy : International Precious Metals (IPMCF)

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To: Daniel M. Whipple who wrote (2377)	2/15/1997 11:14:00 AM
From: Bill Jackson	of 35569

Daniel; Any producer will tailor his production to maximize profits. To run your IPMCl operation at a very high rate would indeed eliminate all the other gold mines. To do a thought experiment if you sell twice as much at half the price you have the same sales. But costs are ounce dependent so you now have less profit even though you have sold twice as much gold. Shortage economics are very dependent on supply demand ratios. With world production and use at around 2200 tons, if you add another 3300 tons to get 5500 tons we would see gold at $50 per ounce. Yes it would drop that fast. There is a balance now. If you add 3300 tons you will get a new balance where new uses (hubcapps, faucets) would use the extra gold as it would be cheaper at ?? oer ounce. Tru you would see some mines go away, but some would not. BRE-X for example is a low cost potential producer. So you limit your production to keep yourself at max profits. This does not apply to a small producer as what they do does not affect the market. BUT IPMCL will be large enough of a tail to wag the dog, and so for it's own good manegement will balance rate of production to demand. Bill Jackson

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