gold producers being priced for 1200 gold, page-5

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chuk

13,740 Posts.

3939

31/10/14

10:35

Post #: 14213932
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Originally posted by samgribbles ↑

Good post Chuk. You would think that the cost base would support price, but recent experience in the coal sector (last few years) has shown that this doesn't happen. If supply exceeds demand then the price just keeps dropping, cutting into the cost base. Some suppliers drop out, but most try and tough it out by cutting costs. Most Australian coal miners have reduced costs by around 25-35% in the last few years, and probably more than half are still not making any money. Supply is stubborn, and we should expect it to be this way in gold.

Those that will do better than others in the near term will be those that hedged gold sales at the recent peaks in price in US$/oz, but did not hedge the AUD/USD.

I am bearish on gold. Global interest rate markets are starting to awaken, QE in the US is winding down. Once the sniff of rising rates in the US gets a hold (still a bit iffy), a year or two ahead of expectations of a rise, then the USD should strengthen as investors take money out of the gold safe haven and buy USD to invest in the US.

In the absence of policy change of central banks, the gold price should trend down over the next few years.

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Thanks Sam, but what do you think about the last part of my quote? You are in the camp of higher interest rates = lower gold but this does not hold during the two periods of recent very strong gold bull markets.

"Wasn't the entire global economy roaring ahead between 2001 and 2008 and weren't interest rates much higher over that same period than they are likely to be over the next 5 years (just look at how low the long bond rates are over 5-30 years)? Didn't the POG move from $256 up to $1000 over that same period of extraordinary global economic growth and higher interest rates? Didn't the same thing happen during the 1970-80 gold bull run (strong growth and record high interest rates)?"

MML Price at posting: 58.0¢ Sentiment: None Disclosure: Not Held

PRU Price at posting: 30.5¢ Sentiment: None Disclosure: Not Held

SBM Price at posting: 11.5¢ Sentiment: None Disclosure: Not Held

KCN Price at posting: 72.7¢ Sentiment: Hold Disclosure: Not Held

NST Price at posting: $1.11 Sentiment: Buy Disclosure: Not Held

ABU Price at posting: 34.0¢ Sentiment: Hold Disclosure: Held

BSR Price at posting: 1.5¢ Sentiment: Buy Disclosure: Held
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0 Great analysis

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