Silicon Investor (SI) -- The First Internet Community

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 -- Ignore unavailable to you. Want to Upgrade?

To: Bob Dobbs who wrote (39294)	8/19/1999 5:38:00 PM
From: russet	Read Replies (1) \| Respond to of 116892

It occurs to me this gold shortage, if it exists, is being supplied by the central banks leasing sales. They lease out the gold for some term, and that physical gold from the bank is immediately sold on the spot market to satisfy the demand. The bank has a paper contract, saying they will get the gold back at a later date. I have never seen one of these contracts, but hopefully one of you has. I have a simple question. When it comes time to give the gold back to the central bank, what's to stop the leasee delivering another form of currency, such as US dollars, instead of the gold? If the lease was for 10 years, the central bank can act as if it still has the gold in its reserves for that 10 years, and no one is the wiser. If the above is true, the central banks are liquidating their positions of gold, just not telling anyone yet. Of course, it means it will take many many years of this selling, before demand for gold will exceed current supply, and ABX is therefore right in assuming that the risk of gold skyrocketing up, and staying up for the length of their gold leasing program, is very very low for the next decade, because cental bank gold will last for decades at the current rate of attrition. If true, the only way a gold company could increase profits and share price in the future, is to find and bring into production gold reserves that are cheaper and cheaper to produce, and use the latest and most efficient means of mining and processing available. So gold companies must be on the lookout for cheaper and cheaper gold reserves. Who finds these? The juniors generally. Perhaps Claude Cormier isn't talking through his hat? It also brings another question. Why would the Bank of England sell their gold in such a stupid way that caused a drop in the price of the gold they were trying to sell, when they could have leased the stuff instead and pretended to continue to own it. It was not in the best interests of the citizens of England, who really own the gold. Hopefully the dolts that dreamed up this sale of gold will get the sack quickly, or they might start selling off the crown jewels next year. Idiots rule the world folks, and we all suffer under their feet.

To: Bob Dobbs who wrote (39294)	8/19/1999 8:24:00 PM
From: Enigma	Read Replies (1) \| Respond to of 116892

Bob - in this case the physical production of 2,500 tons is only one leg of the equation - if there is a shortfall of 1,500 he could have said that 4,000 tons are consumed each year. This is the same kind of bias we see when commentators (today for example) say things like 'producer selling was evident'. I very much doubt if this was true vs. any other day of the week - but you will note that the commentators only focus on the (forward) sales and never on the purchases taking out prior forward sale contracts.