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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Cactus Jack who wrote (52098)	5/27/2002 12:46:02 PM
From: Jim Willie CB	Respond to of 65232

amazing fact, high gold price: DEMAND RISES, SUPPLY DECLINES been reading more and more about these two counter-intuitives as the price rises, it attracts more interest among small investors demand: like sharks smelling blood, like hyenas tracking wounded prey, like ... (you know) can anyone recall the investor demand in 1980 near the top? I do vividly I was finishing graduate school, learning firsthand at the climax lines formed around the block at coin dealer shops demand rises as the price rises, amazing not true of motorboats, silk ties, stereo sets, hookers, or leylime pie gold is different, very different rising gold prices cause a worldwide fever supply: as price of gold declines, large miner forward sales provide strong financial capital to step up production with their lowest cost biggest mines the hedging becomes extremely profitable, and it finances more and more excess production improvement to cash flow in operations is tremendous but it works only too well it depletes mine reserves it puts higher cost smaller producers out of business eventually the end of the road is reached when gold price bottoms out and later rises, hedging ends ample cash flow becomes reduced funding must come from external sources, like commercial loans, private placements, secondary issuances now as price gold rises more, hedging gets unwound this further takes scarce capital out of miner coffers the easy pickin mines are more depleted now the tougher lower grade mines are next into production in time, mothballed higher cost mines come online but it takes time in some cases, mines are taken offline, to help restrict supply happens with OPEC, and happens with mining also, Central Bank selling stops entirely they may be corrupt, amoral, manipulative but they are not stupid, and will hold a rising asset a very capital intensive supply business money needed for labor, equipment, drilling research, smelting, transportation, insurance a fever pitched demand environment fascinating, very counter-intuitive on both sides gold will be going well past $1000/oz prepare for it who gives a wide curly well-tapered rat turd what the press has to say??? market commentators are professionally commentating because they are pretty, have deep voices, look good in a suit, have nice smiles, have nice smiles, and know next to nothing about anything they are surprised every time anything unusual occurs, even the highly predictable events more on this demand-supply issue on gold at later date investor demand was nearly non-existent at the bottom, fast asleep supply was at a frenzied pitch at the bottom, incl Central Banks think about these amazing two facts / jim