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Gold/Mining/Energy : GOLD-XAU -- Ignore unavailable to you. Want to Upgrade?

To: paul ross who wrote (1354)	3/5/1998 10:24:00 AM
From: Enigma	Respond to of 1756

At what point do we begin to factor in mine closures or cutbacks in production? Producer hedging by mines selling at near, or even below cash cost of production, can only postpone the evil hour. Because when the contract comes due and you don't have the gold you change from being a hedger to being a common or garden speculator, and the jig is up. If we believe what we read a high proportion of the world's mines are losing money, basis spot, at these prices. So if you are a hedger with a high cost mine you are indulging in board room gambling, because for many mines a sustainable price of, say, $360/or better is required. Leaving aside the social consequences (massive miner layoffs - something of no interest whatsoever to the shorts) a slow drawn out recovery would be the best thing to fix the supply side.