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Strategies & Market Trends : ahhaha's ahs -- Ignore unavailable to you. Want to Upgrade?

To: jrhana who wrote (7281)	1/16/2006 2:55:42 PM
From: ahhaha	Respond to of 24758

I really don't agree with you on this You should relent and agree because he's right on grounds of logic. -but the topic is of trivial importance. The "topic" is not trivial since one must stay at least within the bounds of logic to make sense at all. Another non trivial "topic" is what is demanded in this place. One has to read well to survive here. I imagine we should just drop it and let the thread go on to more interesting discussions. You asked for reference to my claim that gold mining companies were the standout disasters among all companies during the '30s depression. I could give you that but it isn't really necessary. You can reach the conclusion without handholding from some authoritative source. Apparently you don't realize how risky and capital intensive gold mining is. During the '30s depression all sources of capital dried up or were secreted and few people wanted to take risk, especially not with some prospect like gold whose value was officially constrained and was not of much utility. The combo of no capital and risk averse affects gold miners more than in any other industry. Accordingly, gold miners went under to a greater extent. Good times are needed for gold price to advance to encourage capital investment. During not so good times, like the '80s and '90s, gold did poorly, and output dropped faster than slowing demand for the metal. Now we have good times. Demand for gold is flat to up and enough wealth exists at the margin to take risk in gold mining investment. The POG must rise until the miners have repaired their balance sheets enough so industry wide operations can meet total demand. What POG achieves this end? Find the largest scale least efficient gold miner and figure out what POG enables them to deliver at their average expected scale. This POG would be the instantaneous potential future POG. You could expect the POG to reach this level tomorrow if all uncertainties went to zero. Is there such a company? There is. DROOY. Figure out what its breakeven cost is. This is difficult because many of their mines are depleting. However, they have deep gold and maybe in abundance. But then they have unionized miners who would demand more compensation as DROOY approached breakeven. Labor compensation increases would be delayed in time so DROOY's breakeven will be reached. In the interim demand may rise too. There isn't much investment demand currently, but that may change. Obviously that development would extend the upper limit on the POG, but it can't be determined at this time. Maybe such a determination isn't necessary. Maybe all one needs to do is properly interpret DROOY's stock chart. You could also do the same exercise with NEM, and keep a geometric mean of the %change of the stock price increments of the two stocks.