To: Crimson Ghost who wrote (63972 ) 2/18/2001 3:36:11 PM From: Zeev Hed Read Replies (4) | Respond to George, I think that the current decline in gold could be traced to a good 10 to 20 years of increased production. In the last five to 10 years, cheap Indonesian (cheap to extract) has come to market (I think they went to close to 5 MM onces a year from just few hundred thousands in no time), similarly few other areas (including our own huge heap leaching operations in the west) have come up, leaving behind many of the expensive SA gold operations to suffer. It is no different than getting good Anaconda (cooper) and a good chunk of the US Steel industry in the dust. The new efficient producers take market share by having lower production costs and lower selling prices. The short position, IMHO, may not be the cause, but the symptomatic reflection of the belief of these "professionals" that with improved technology, and new lower cost reserves, an imbalance toward over supply might be gradually developing. I think that in 1979/80 the trough in gold production was under 40 MM oz/year, today it has breached 82 MM oz/year. It seems to me to be a typical supply/demand imbalance rather than any conspiracy. The shorts and the forward selling by the mines is a reflection of their opinion that this situation is not going to change soon.
