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Gold/Mining/Energy : Blue Chip Gold Stocks HM, NEM, ASA, ABX, PDG -- Ignore unavailable to you. Want to Upgrade?

To: Wade who wrote (417)	6/26/1999 11:17:00 AM
From: Exsrch	Read Replies (2) \| Respond to of 48092

Wade, I think your prospective speaks to exactly the reason why Buffet should invest in ABX. Let me explain: <.... for its expanding business in a shrinking industry?> really speaks to the consolidation and concentration of producers to ultimately create an oligopoly. Which would in this case increase survivors profits Why? Low cost production can be efficently expanded while expensive production is taken off line. This strengthens players like ABX and NEM. This shakeout would in effect be the natural selection process of ridding non shareholder value adding firms. Yes, the industry would shrink non economic mine and companies; however, in its place would rise mines and companies that can compete in a low gold price enviornment. Industrial and commercial demand for gold rises modestly each year; however, the real exogenous demand shock is the monetary demand for gold. Currently with US$ at an all time high the monetary demand for gold is at an all time low globally. Should this change (I would argue it is a matter of time) you would have commensurate demand for physical gold and gold stocks. With Buffet holding so much in financial services (insurance, reinsurance etc) ABX fits his profile as a value and growth stock thats serves to reduce his risk profile in the following events: - Downturn in the stock market - Higher interest rates - Expanding money supply and inflation If we were to believe that Buffet wouldn't buy ABX than why would he buy silver? Thanks for your reply. I think it is these types of exchanges that will help us as investors. I sincerely hope you'll respond and push this line of thinking to both of our benefit. Cheers, Exsrch