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

To: Zeev Hed who wrote (63973)	2/18/2001 4:54:50 PM
From: Crimson Ghost	Read Replies (1) \| Respond to of 116789

Zeev: You are right about the need to close many more higher-cost mines. But cheap CB gold leases have been a major factor in keeping such mines open. Profits from the hedge book have encouraged miners to keep mines going long after they should have been closed. Any what you slice it these cheap CB bullion loans have been a key factor in decimating the gold market. BTW, even though few mines have closed, gold industry exploration outlays have plunged in recent years. So we should soon see gold production drop off significantly if prices remain depressed.

To: Zeev Hed who wrote (63973)	2/18/2001 5:48:23 PM
From: russwinter	Read Replies (2) \| Respond to of 116789

Zeev, your comments about the shorts being right on gold reminds me of the "buy the dip, momentum investing" stock market mantra of 1999-2000. Just do what worked last time (actually the shorts were badly mauled in gold in the WC rally, to the point of needing a bailout). The problem is, and has now been shown in the NASDAQ example, that when momentum breaks, look out. That's what happens in any aging trend, and the bear market in gold is no different. It allows even the most ignorant groupies to acquire the superficial luster of theoretical knowledge that justifies decisions based solely on just momentum investing. The secular disinflation theme now played by the shorts, is the reverse of the momentum-driven psychology that coaxed banks in the early-1980's into lending aggressively against the value and cash flow of hard assets in the assumption of never-ending inflation. Now we've gone full circle, and these intermediaries have lent gold just as aggressively based on the opposing disinflation theme. Once strong beliefs take hold, they remain in place long after there is considerable change that invalidates the original assumptions. The problem is, how do the shorts eradicate themselves, once the change is apparent? Answer: Like a puppeteer that is running out of ammunition. Physical gold and the short position are now so severely mismatched(see post 63972), that the funds and bullion banks are providing their own liquidity and keeping the kettle down, via new short sales. This is no small stuff, in fact it's historic, and I have little doubt that it is just a matter of time before we have a mega-LTCM event. Can they take POG to $250 or $240 first? Who knows, but there is no escape. I also believe it (massive carry trades) is occurring in the Yen, as well. On the escape question, an understanding of delta hedging formulas is recommended. I won't bore everyone with the grisly details as they can be gleaned from this. Hit Gold delta hedge trap silver-investor.com In a nutshell though, the black boxes force the hedgers to buy back positions as the position moves toward the in the money price. Thus, higher POG will fuel and stoke the fire even more.

To: Zeev Hed who wrote (63973)	2/18/2001 8:09:22 PM
From: Square_Dealings	Respond to of 116789

Gold will rise as sentiment shifts to saving money instead of borrowing and spending. The risk of loaning money or gold, or anything else at this point in time is high due to the high risk of default. The credit bubble is just starting to burst, and gold and gold derivatives are part of the debt that must be paid back. Despite Greenspans rate cuts the market is telling us that there will be no recovery until debt is under control or settled. Short terms rates will go up. Gold prices are going up, preferrably slow and steady unless the air comes out of the credit bubble in one big pop (in which case gold will go up quickly) I'm hoping the mines get together and shut down production just to see what the real demand is. When people realize they cant make any electronics without it, they may just be willing to pay more for it. M.

To: Zeev Hed who wrote (63973)	2/18/2001 10:22:49 PM
From: goldsheet	Read Replies (1) \| Respond to of 116789

> I think that the current decline in gold could be traced to a good 10 to 20 years of increased production This is basically the same thing I have been saying for the last 5 years, frequently on the GPM thread, so I'm glad to see you participating here. I don't feel as lonely <g> I try keep to the simple supply-demand stuff and do not go for all the alternative conspiracy theory explainations > 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), Went from under 100,000 in 1988 to 5moz in 1999. > few other areas (including our own huge heap leaching operations in the west) have come up I'm a big believer in technology overcoming many problems in the mining industry. Australia and the United States both went from about 2moz in 1985 to over 10moz by 1998. I have these increases pretty well covered in my comments and graphs at: goldsheetlinks.com > until inefficient gold capacity is forced out of the market, by closing marginal production, a meaningful price recovery in gold should not be expected. Agreed. I recently commented this may not happen for at least another year. It's human nature to not admit when you are wrong, so marginal mines may well keep operating much longer than logic would suggest.