Zeev's Turnips Patch-No Politics (ZEEV)

[Public Heel]

Dan... Gee, no one mentions my reason. If I wasn't sure that I'm right, and that my reason is best, it would be enough to make me doubt myself.

But seriously, though...

The point about inflation affecting the miners' costs should be taken into account in my mathematical scenario, especially because it serves as reinforcement.

Let's take an extreme case, where the POG goes from $450 to $1000 in two years. We'll say that the producers start out having to pay $250/oz, and that their costs go up 8% in each of the two years.

Under my original proposal, the POG increases $550, or 122%, while miners' profits go from $200 to $750, or 375%, giving a profits/POG ratio of 3.07...

Now, add in inflationary effects on costs of approximately 17% over the two years. Profits now go from $200 to $708, or a 354%, and a profits/POG ratio of 2.9...

Of course, it's almost certainly worse than that. FOr one thing, in a scenario where the POG went from $450 to $1000, I doubt that cost inflation would be limited to 17%. For another, the miners will be hit with steeper tax rates (and some will go from losing moneh to makig money, and their taxes will go from "negative" to positive).