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

To: goldsheet who wrote (63208)	2/2/2001 3:42:01 AM
From: GST	Read Replies (2) \| Respond to of 116753

BOB: The current account deficit is the bull case -- we may see the impact of this when the jobs report is released -- we will know soon.

To: goldsheet who wrote (63208)	2/2/2001 6:13:27 AM
From: Rarebird	Read Replies (3) \| Respond to of 116753

<Eventually, the situtation will turn bullish for gold, but with mine production near records levels and the possibility of a recession looming (reduced demand), I personally still can not make the bull case.> Why are you looking at Gold solely as a commodity? Historically speaking, Gold has been the prize investment during periods of deflation. This deflationary process has already started and what is primarily holding gold back here is the absolute faith of market participants that the Fed will save the US economy through massive pumping of the money supply and radical easing of monetary policy. What I see is a tremendous amount of debt on the part of the Average American which will prevent him from spending the way he did during the bull market for quite some time. Greenspan was too late in changing monetary policy and the economic cancer called deflation has already begun. The layoffs have just begun and the chances of Greenspan being successful in reinflating grow slimmer each passing day. Cash is King in an economic downturn. That is the commodity which is conspicuosly absent, along with dwindling consumer confidence, that monetary policy is powerless here to address. Once the debt piles up to astronomic proportions, even reducing rates to Zero won't help. That is the lesson from Japan in the 90's. As always, Gold is waiting in the wings, as the investment of last resort. That last resort will become a reality sometime this year. Game, set, match point, is coming in 2001.

To: goldsheet who wrote (63208)	2/2/2001 7:16:56 PM
From: russwinter	Read Replies (1) \| Respond to of 116753

Couple points on the ability of miners to produce 54 million oz and still survive beyond this decade. First reserves in total are stated as 700 million oz.. Further the majority of majors are using 300-325 assumptions to base their reserves on. The last time I checked (this afternoon) spot gold was 266. There is a world of difference between 266 and 300/325. I wish I could value my extensive junior portfolio that way. Most of my holdings (being in the top quartile cost wise), would be immensely economical. Using 300/325 is slight of hand and misleading. It is even more misleading (and dangerous)to use percentage of reserves (such as 25%)as a basis for hedging policy. And you can see the "little" admissions creeping into the quarterlies about declining revenue on a per oz basis. The reason is simple, the higher priced low to mid 300's hedges are being delivered into and are being replaced at sub-300 prices. A plan vanilla contract for early 2003 delivery runs about $288. It is going to get tougher to make a go of it when this hedging heroin fix is weakened. When one looks at the cost structure of the majority of this industry, you just can't see how they are going to inexpensively come up with replacement reserves on location. I would go so far as to argue that since mining is a risk activity that demands a double digit rate of return, that perhaps reserves should be valued on a 250 basis (currently) to accurately reflect capital invested, exploration costs and production costs. The present approach is not much different than Amazon.com's badly flawed "revenue generation, without real profit" model. One of the reasons I believe production could drop 5 to 10% in the next two years (if prices stay below 300)is the care and maintenance issue. Mines with higher cost structures aren't worth the investment to fix if there are any problems. And there will be more recurrent problems. Syama and Refugio are examples, and like the old slum tenement with broken waste lines and a bad electrical system, when things go wrong, they'll just walk away as the rents don't cover the bills.