Some Perverse Thoughts on a Sunday Morning:

Gold Prices May Get Too High.

I admit it. It may be perverse for me to think that if gold prices go well north of $2,000/oz., that there will be a plethora of marginally economical or uneconomical gold exploration companies, that would have only a marginal or no chance of ever going into production, when at these predicted record high gold prices are reaced, will suddenly have an excellent opportunity of being economical and becoming profitable mines.

You ask: Why might this be perverse?

My answer: Because it’s my selfish “Saudi oil” point of view.

That is, I don’t want to see so much new gold “over- supplying” the market that prices retreat quickly, vis a vis more supply than demand and, thereby cause a foreshortening in the length of time Minefinders and many other miners remain profitable.

It’s often suggested that OPEC and the Saudis have a vested interest in holding down oil prices so that alternative energy sources do not accelerate oil demand destruction. That would result in much lower oil prices sooner that could hasten the drying up of thier Cash Cow. Likewise, how possible is it that, from a great increase in new mines, that a great new flood of gold into the market, resulting from stratospheric high prices, might “pre-maturely” trigger the end of the Greatest Gold Bull since the 1970’s and ‘80’s?

One thing that makes gold so valuable is that it is hard to get. Could the feared possible change in the current supply-demand dynamic be so compelling that the market will find so many new sources, so many new gold mines(I might even sell my gold tooth) that gold prices will collapse ?

If my simple minded fear is justified, then I hope that gold prices do not soon go bananas and that we’ll instead see a more sustained moderate elevation in gold prices that result in a much more extended gold bull market, than would be the case if there’s an over-supply induced crash in prices.

Yes , I’ll have another cup of coffee,

Thanks,

Baires