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Gold/Mining/Energy : Gold Price Monitor -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (48225)	2/6/2000 6:03:00 PM
From: Ken Benes	Read Replies (3) \| Respond to of 116763

Investors do not purchase gold stocks because of low pe's, cash on hand or any of the other usual fundamentals that can be applied to investing in most other equities. Buyers of gold shares want leverage to an increase in the price of gold during periods of uncertainty. As witnessed in the 4th quarter of 99, hedging has capped the ability of a gold equities to rise exponentially to the price of gold. Consequently, gold shares are having a great deal of difficulty attracting investor money. If investors are looking for fundamentals, clean balance sheets, and cash on hand there are many other equities that provide those qualities. Ken

To: russwinter who wrote (48225)	2/6/2000 6:58:00 PM
From: goldsheet	Respond to of 116763

> Unfortunately those producers still mine a lot of unprofitable gold (on a full production cost basis). >Indeed the stats I've seen suggest that 70% of the world's production is unprofitable below >$300 on a full cost (cash, capital and exploration costs) basis Agreed, although I would think it is now closer to 50%. Anyway, since mining is a capital intensive business, it is quite common for cash costs to be under total costs by at least $75-100. Depreciation is a non-cash expense on the income statement, therefore it makes sense to miners to keep mining as long as cash flow is positive, even if reported earnings is negative. In any other industry one usually throws in the towel when EPS goes negative, miners have to keep producing all the way down to their cash costs to pay off their loans. As I said, it's a weird business. > By the way, I appreciate the debate. It's not a debate, just a reasonable discussion. I like it when someone can cite specific numbers and draw reasonable conclusions. I can see the numbers diffrently or cite other numbers, which provides more information for everyone to draw there own conclusions.