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Gold/Mining/Energy : Gold and Silver Mining Stocks -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (851)	4/26/2001 9:03:22 PM
From: goldsheet	Read Replies (1) \| Respond to of 4051

I know you want to see at least a 10% decline, but I am starting to (re)think it will not happen. It seems when prices go up production increases, and when prices go down production goes flat (instead of dropping). It's the "investment cycle time lag effect", for lack of a better term. Investment decisions are made when prices are rising, and by the time the projects are up and running the prices have peaked and are headed down, but they can not easily walk away from the big capital investments as long as cash flow is positive. Looking at the price drop from 87/88 (average gold prices of 446 and 436) to the 92/93 bottom (average=344/360), production kept going up from 1850mt in 1988 to 2250mt in 1992 (the opposite way of prices) then went flat for several years (93=2270/94=2250/95=2328). Meanwhile, the rise in gold prices in 1993 which brought us back up to 400ish generated lots of investment, which of course showed up in production after prices peaked in early 1996 ! Gold production is in its fifth consecutive year of increases, while average annual gold prices have decreased for the last five years. My latest thought is flat-to-slightly down production for a few more years 2001/2002, then decisions by miners to go ahead with projects in 2003/2004 hopefully based on higher prices (only took a $75 rise in 93 for investment capital to flow like water), then new record mine production in the 2005/2006 timeframe. I am starting to think we might hit 3000mt (over 100moz) in the next investment/production cycle.