FinancialAdvisor's College Class (FACC)

[AnderL]

Considering the gold Production link 4god posted if there was a production of 1200 metric tons of gold in 1774 and as of 2001 there was a summit of 2600 metric tons of gold produced that would entail about 216% delusion of the gold market since 1974. Considering the inflationary rally of the commodity markets over the last 3-4 years if we discounted this amount of gold in the market we would expect to see a gold price of $989.88 per troy ounce. So if Gold Miners ceased operation as of 1974 and no new gold was brought out into the market Gold would effectively be trading at $989 when it reached its top in Dec. There is your power spike.

Because gold is not destroyed and it is stored it is dilutive. The momentum of the recent rally does not mean gold still has more to go, miners have put out so much gold that it is slow to move. Similar to the difference between a stock with an Float of 2 million as compared to 2 billion.

So that kitco commentary is absolute BS when they are quoted as saying "Meanwhile gold is so darned low in real terms that it hasn't even returned to mid-1990s levels yet! The folks who claim gold is expensive apparently don't understand inflation." Apparently they do not understand inflation if they don't see that gold production in disruptive to price.

No wonder Miners are hedging themselves in the gold market. It's like insiders who short the crap out of the stock through an offshore fund before they dump several million shares. They know what is going to happen and they are doubling up on their profit potential. At least he gold miners are off setting their revenues in production through a hedging instrument. At least it keeps them solvent for that much longer.