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To: goldsheet who wrote (7982)	9/28/1999 5:41:00 PM
From: goldsheet	Respond to of 81068

I posted this on the GPM topic, comments ?? > So once the Short squeeze is over, what happens? I might as well stick my neck out for chopping. We go back to the fundamentals of supply/demand. I have always thought the equilibrium value of gold was about $325-$350. 1) The increased primary mine beginning in 1995 at 2250mt (72 million ounces) and peaking at 2555mt (82 million ounces) last year was a significant structural contribution to the drop we had from $400 in 1996 to $325 in 1997. 2) Add the Asian crisis with its 1000mt in scrap contribution to the supply and we saw gold stuck between $275-$310 for all of 1998. 3) Add the CB concerns in early 199 and we ended up at a bottom of $255. The last two factors were short-term aberrations and caused uncertainty. The central banks have now quantified the risk (400mt/yr for 5 years) and the Asians have stopped selling gold and are now probably buying. This takes us back to the basics, looking at supply demand, mine production, mining costs, etc.. In the last few years miners have made substantial improvements in processing and cost, and I think they will continue to supply at very healthy level (80 million ounces +), so I'm back to thinking the "fair market value of gold" is about $325-$350. We can always go higher, since market still tend to overshoot on the upside, as well as the downside.

To: goldsheet who wrote (7982)	9/29/1999 7:26:00 AM
From: sea_urchin	Read Replies (1) \| Respond to of 81068

Thanks Bob. Saw that. I'm just a little bit apprehensive about the dynamics behind the present gold price rise. What worries me is the cause is a technical factor (shorts being cornered) rather than genuine demand in the market. I am also concerned, now that the price has risen by at least $50, that short and long term selling by the mines etc will happen in a big way. For these reasons, although POG could go ballistic in the near future, I'm not sure that the price rise will be long enough to significantly effect the producers (stocks).