"The 200 million ounces of gold that is NOT going to come out of the Bre-X property...that's nearly 5% of the above ground global gold supply, isn't it?...should've been a big positive for gold."
Nope: If there had been 200 Million ounces, that would've came over a 10-25 years production timeframe {or longer} and the effect would've been graduall. The commodity demise of 1995-1996 is only related to demand, and currencies. Consider INCO, and Voisey Bay. A world class discovery with zero production to date. A person could suggest that the commodity is over hanging the market, yet until production is under way, it's just a reserve. Maybe your production goes the way of washout into a river {Was it Placers Domes?}, and their physical breakdown of a dam. Bre-X was only coincidental of being near the beginning of the commodity bear! Very few were effected by margin calls, and the good RR wouldn't let an average investor have a margin.
What is holding backs juniors, and seniors to a larger extent is the lack of demand versus supply. It wasn't until recently that copper prices have started to pickup. You can blame Lesson for holding the bubble up for as long as he did. But even he ran out of accounts/money/credit to keep the bubble going while the markets were trending elsewhere. {Maybe Lesson could get a job at LTCM} If not for him, it would've been a slow bleed.
The world needs a strong currency {any currency} to keep production going. The worst think to due would be to end up with one world currency. It's the money flow around the world that actually excites investors. Chasing capital is what most mutual fund buyers do.
"if the gold market hadn't been devastated by all those margin calls etc..there would have been plenty of money around to move the gold market when the currency crises started"
Nope. Most people still own the equities that they married so long ago. Few sell! Margining Gold stocks can be a wild ride. If demand has picked up so high as many suggest, then GOLD would move based on preception alone. But better and more exotic hedges then gold now exist. Many first hit the streets in 1986, and were there in 1987 when the markets dropped. Gold is being demonetarized, not because CB fear it, but because it's loosing it's luster as a hedge. Even Peter Munk can say that. If there is 1.3+ Trillion dollars {or 4.3Billion Ounces @ $300.00} a day flowing around the world doen't that demonstrate the insignificance of Gold as a hedging power? There aint enough gold to hedge with.
Maybe Greenspan should notch rates up! |
