Re: No New Gold Mining Supply under $1,200/oz.

Renli wrote:
No New Mining Supply Below $1,200 per Oz
http://silverbug.wordpress.com/2008/08/28/no-new-mining-supply-below-1200-per-oz/
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Today’s interesting article is “No New Mining Supply Below $1,200 per
Oz” by Adrian Ash in the London Gold Market Report.

Let’s think about the implications of this for a moment;

1. Gold is nearly guaranteed to go over $1,200 an ouce in the short-
medium term (6 months-2 years)

The question is when. Gold already has headwinds due to inflation. Add
population growth to this; gold ounces per capita is decreasing. And
now we see that there won’t be any new economical mine supply under
$1,200 an ounce! So “when” should be “soon” - a lot of analysts are
predicting within a year. Now, that’s a 50% gain almost guaranteed
($800 to over $1,200) within just a few short years. There is always
risk, but that sounds like a risk I’m willing to take!

Another reason this is good news is because it implies the gold price
will rise naturally, without a catastrophic financial collapse or any
sort of doomsday scenario, period. Gold will rise because of supply
side issues and not demand side issues. Good news indeed - we can
invest in gold and not be all doomy and gloomy! This really is good
news, for everyone.

So, it certainly looks as if the outlook for gold (and silver) is
quite bullish. Given the recent technical lows, it seems like now
would be the time to pile in. Actually getting in under $800 would
have been spectacular - although only time will tell for sure. Perhaps
in six months or a year we will revisit this article and see what’s
happened regarding supply-side issues.

There are so many opportunities out there, not just in physical metal,
but in juniors and even mid-tier producers that most of my time is
spent making hard choices not to discern which mining company will
make money - but which mining company will make the most. It’s really
an investor’s market if you know where to look! And there are a lot of
other companies out there with a strong outlook too, energy companies
in particular, again, if you do your research they will be found!

As always, questions and comments are welcome.

More Information:

* UBS advises investors to buy Gold by Rhona O’Connel, August 28,
2008
* Trading Gold for Silver by David Morgan, August 28, 2008
* Precious Metals Heading to All-Time Highs by Frank Barbera CMT,
August 27, 2008
* Silver Believed to Have Bottomed by Clive Maund, August 26, 2008
* A Rough Projection of Gold and Silver Prices by Reinhard Seiser,
August 24, 2008
* How Low Can Gold Go? by Stephen Clayson, August 22, 2008

Comments (0)

You'd have to have your head read if you were buying gold at the moment.

Fraser
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