This article is pure gold.MARKETWATCH FIRST TAKEBHP's...

This article is pure gold.

MARKETWATCH FIRST TAKE
BHP's shareholders strike gold -- in the paper
Commentary: There's a whole lot of rumor-buying going on
By MarketWatch
Last Update: 9:40 AM ET Sep 24, 2007Print E-mail Subscribe to RSS Disable Live Quotes
LONDON (MarketWatch) -- A report Monday that BHP Billiton will report a significant increase in proven gold reserves apparently helped fuel the stock in a classic "buy the rumor" sort of way.
Shares of the company (UK:BLT: news, chart, profile) (BHP:BHP Billiton Ltd
News, chart, profile, more
Last: 76.14+3.61+4.98%

2:43pm 09/24/2007

Delayed quote dataAdd to portfolio
Analyst
Create alertInsider
Discuss
Financials
Sponsored by:
BHP76.14, +3.61, +5.0%) (AU:BHP: news, chart, profile) jumped sharply on the "news." See related story.
One should of course be tempered in one's response to such stories. People have fallen out of helicopters over less.
And we're not talking about a new discovery here, but rather an "upgrade" of the amount of gold at what's admittedly a very rich mine in Australia.
Extraction costs don't go away, and while converting BHP's Olympic Dam to an open-pit operation, as may happen someday, would presumably reduce those costs, there's a big capital expenditure to be had there as well.
And in the years it takes to actually extract whatever additional gold, if any, there is, it's impossible to know where the dollar, or interest rates, will be.
With gold already trimming some of last week's substantial gains, short-term traders should be cautious about this one. Gold melts at 1,948 degrees. But portfolios tend to turn to liquid at considerably lower temperatures these days.