To: Crimson Ghost who wrote (49632 ) 2/25/2000 5:46:00 PM From: Ken Benes Read Replies (2) | Respond to
Today was an interesting day, Secretary Richardson consulted with the Saudi's and the Kuwait's in his effort to get them to pump more oil. The response by the producers, we expect a drop in demand during the spring, let wait and see how the supply and demand scenario plays out. We will wait till a regular scheduled meeting to make a determination about increasing production. This is a far cry from the gold producers. Any kind of jawboning from bankers, speculators, or governments will cause a run on shovels. The gold producers will have their wifes manning the trenches to get more production on line. Predictably, the price of gold collapses. The producers do not need a high gold price to borrow money, mines get build regardless of what the prices are. The bankers are there ready and willing to lend any amount collateralized by their gold in the ground. Reserves are used to finance more production that drives the price of gold lower, followed by the share price of the producers. You think the managers care about share price. One way or another they will get their compensation, stock options, free cash flow, commissions for leasing gold, you name it is available to them. The shareholder, he will not see a dime, no dividends, no price appreciation, just a glowing presentation how hedging has preserved the corporate cash flow that never finds it way to the owners of the company. I will say it again, the industry does not need new production, it should be withdrawing new gold from the market by delivering to their hedgebooks. This will not happen as long as the producers are working for the bankers, the speculators, or any other individual that has a vehicle to profit from falling gold prices.
