amory hill,It goes something like this.Companies that are...

amory hill,

It goes something like this.

Companies that are producing gold have reasonably fixed costs that do not vary greatly based on the price they sell their product for.

So, when the price they can sell gold for rises, and their costs have remained static - it means that they make more profit, increasing the value of the company and subsequently the share price usually rises.

Does that make sense or is it still too complicated.

Cheers

Badfish