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To: Bilow who wrote (5177)	8/16/2000 12:02:56 PM
From: pgerassi	Read Replies (1) \| Respond to of 275872

Dear Carl: Re: Developing Countries Cap to GDP ratio The reason for the low market cap to GDP ratio in a developing country is that the assets required to pull out meaningful quantities of minerals is quite low. A million dollar mine in Ethiopia could extract $10 million dollars of gold a year easy. Thus, the cap to GDP ratio is .10. As these resources are harder to get (the easy to get ones are depleted), then the ratio begins to climb. Remember that large fortunes were created in the last century where the US would have been considered a developing country. Some of the richer claims were mined by the environmentally harmful hydraulic mining techniques. They costed only a few thousand dollars but were able to mine millions in gold per year. Most mines back then were placer types requiring few assets in order to mine. You could not know what their reserves were, thus they were valued by their replacement cost and a fraction of their take last year. Since the take using newer methods did not occur yet, the market cap was low when the GDP was rising. The fraction was somewhere between 10% and 33% and this fell after the peak production occurred. As you can see, the cap to GDP ratio is the same as the fraction. Pete