Hi skol, the oil price is very different. The Saudis and many others still make a large profit from oil and therefore supply is maintained. What is affected is government revenues are reduced not profit on sale of oil. Iron ore for bhp and rio still realise profit and potential for supply increase also the major effect again is on Australian government revenue.Oil and iron ore is dominated by cartels that are going for market share, this is where the gold market is differentiated. It is not as easy for gold producers to substantially increase production as margins diminish. Most mines run at 94-96% mill availability and at near maximum tonnage throughput. Only by mining the highest grade ore if possible or increasing plant volume through construction can this be achieved. There is negligible latent capacity in gold production. The reason production is increasing at present is from investment that was put in during golds peak US pog. Rationalisation has a time lag effect, first the companies will go through cost cutting and plant and mine plan optimisation. If this still doesn't allow profitable operating environments merger and acquisitions will absorb operations that can be made profitable by a change of economies of scale metrics. This process will take a reasonable time period to play out. Due to the nature of gold not being consumed supply will always be there to a certain extent at the right price. Mining production will not because as cost of production increases and price falls operations will be forced to close. flexibility of oil production and gold production are not really comparable in the way you have put them forward.
Cheers skol.
