Gold Price Monitor Message Board

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Gold/Mining/Energy : Gold Price Monitor

GDXJ 93.98

+0.6%

Nov 21 4:00 PM EST

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next

To: Ken Benes who wrote (34622)	5/28/1999 11:32:00 PM
From: ahhaha	Read Replies (3) of 116764

Good synopsis. Miners borrow from central banks and sell against in-ground delivery. This works as long as a short squeeze doesn't develop or if macroeconomic factors don't force central banks from calling in the bullion loans or stopping the renewal of leases. Gold that goes out of a central bank disappears into the black hole. The forward selling mining companies have to deliver or go to prison. If a short squeeze causes the price to soar, then hedged mining companies have to spend more than expected recovery cost since they must return the collateral now, but they can't get enough out of the ground now to do so. In a hurry the production cost might soar. It takes time to produce and that may mean even higher prices which they can't realize since they have an unfulfilled commitment to deliver much of the in-ground at recovery costs assumed when incurred to be much less. The persistence of forward selling by mining companies abetted by carefree central banks, could see a scramble by mining companies for bullion which creates the squeeze. That is usually how machinations of clever guys end. See LTCM.

Report TOU Violation

Share This Post

Public Reply Prvt Reply Mark as Last Read File

Previous 10 Next 10 Previous Next