WELL - I would be happy to invest in this space now. So it follows that I am happy to trade here. Here's a cut-and-paster:" Gold is a "true money" ;and it had begun to tell its story already over the last 12 years: that there were unsustainable systemic inflationary forces developing. So while nobody "needed" it because there was no panic, it was still tracking prices higher due to cost-push factors primarily in the direct production of the product and political risk factors due to expanded (again unsustainable) social programmes in the countries that mined the gold. So - higher internal rate of return was sought by investors to compensate for the risk profile of the venture. This means that gold was "dragged" along as it were. If there is demand for gold due to crisis, we will see what can happen in a demand-pull inflation environment. With highly constrained sources of production and massive capital commitment (ie. top-end of the curve)required to expand production. Add to this the huge amount of time to put-down a new mine and exponentially more difficult (read expensive) ore bodies to exploit in ever more uncertain political envronments. Since gold rose in a cost-push environment it is obvious that the miners saw massive profit errosion If we switch to a demand-side scenario: you get huge profit expansion; escpecially in light of the fact that these miners have expanded volumes to reduce per unit cost and increased efficiency. They are also becoming more and more automated In short, any extra selling price goes directly to the bottom line.
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