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

To: Zeev Hed who wrote (63981)	2/18/2001 7:17:03 PM
From: russwinter	Respond to of 116790

If the party starts on July 5th, I'll live. Yes, I think production shortfall is an element. The industry is sickly. GFMS in their survey shows (@260 POG) 20% of production as underwater on a cash cost basis, and 60% is on a full cost basis. Over half the industry is just liquidating capital. Go to slide 8: meridiangold.com And to illustrate how much on a shoe string these outfits are, take the example of McWatters last week. They closed pretty decent mines on a cash cost basis at Sigma-Lamaque, and soon at Kiena, simply because of capital constraints (translate they don't have a lender any more). Incidentally, McWatters (or their bullion dealer) has an undeliverable 238,000 oz hedge book to deal with as well. That's what happens when your product sells below replacement cost and you have no margin for error. Banks and investors shun you, as well they should. The whole industry is going to get blitzed with that and fairly quickly at this point. I really don't see any producer as immune. If that's (lack of capital) not enough for you, how about 1. unforeseen production shortfalls (yes, Virginia it's mining, not coupon clipping) 2. labor problems 3. natural disasters 4. faulty mine plans 5. changes in taxation 6. environmental impacts 7. sovereign risk. And of late add 8. energy (and other unexpected cost changes). Finally how about, 9. slightly lower prices thanks to bullion dealers and fund speculators leaning on the product you sell. Gee, I hope I didn't miss anything. In a nutshell, mines are going to be closed at a drop of a hat. If there is any justice in this world, their bullion dealers will get to eat the hedges. With the kind of sub-prime credit risk they've taken on (and to think CB's lease dealers gold at 1% for this kind of nonsense), hopefully they can eat alot more than just undeliverable hedges. In fact, that's all that's left of some producers, just a hedge book. And is new production the answer? Forget it! I consider exploration deposits my forte, and have a whole portfolio of promising ones. I can not see a single project anywhere coming on line at $260 POG. I can't see it at $275, and at $300 if prices can hold I can visualize a few. Maybe at $325, a few more, but not much. If we went above $325 and held for a year, then we could see a little new production three years out. Absolutely none between now and then.

To: Zeev Hed who wrote (63981)	2/18/2001 10:28:48 PM
From: goldsheet	Read Replies (3) \| Respond to of 116790

> I think that by that date (five months or so from here) the yellow will still be trading under $300. I'll stick my neck out and predict we will not see over $300 in 2001. We might not even average over $279, which was the average for 1999 and 2000.