Hrattle, you have politely requested feedback on your opinions, so please allow me to oblige.

You ask, how can the dollar AND worldwide currencies be weak too? Well, the answer is that its all relative. How much can you buy with any unit of currency today, and compared to what that same unit of currency could buy a year or ten years ago? I am not aware of too many currencies where the purchasing power has increased, therefore, are they not all weak? Lets consider the peso, or the ruble, or the Euro for example. Now most currencies are compared against the US dollar since that is the world reserve currency and hence it represents a fixed unit of comparison. Yet even then significant divergence is possible over a period of time, as anyone converting CDN in US dollars lately will tell you. I believe in time that all currencies are subject to lose value against gold, the ultimate currency, because the total amount of gold in the world today is growing at a much slower rate that printed money, or people for that matter.

I find your comments on 'supply' confusing. I assume you refer to gold production as supply since you state it is down, when the total amount of physical gold inventory is rising. But to address your point, that declining production is bearish because it is not profitable. The laws of economics tell us that the price for any commodity will rise to a balance of supply and demand. If an item declines in production because the market price is too low to generate a profit, then the supply to the market will decrease, demand will create competition for that product, and consumers will pay higher prices to obtain it. Therefore, declining production for gold is always bullish as hell. The opposite situation would be a 'glut' in which too much of any commodity is being produced and over-supply is the result. That would be a bearish outlook in my opinion, but I think we can both agree that is not the case.

There is no production scenario that is sustainable if the price of the commodity is below the cost of production. It is self correcting. Eventually, the higher cost producers go out of business, production declines, and prices recover. Period.

I would add that some people thought higher gold prices would eventually generate a glut of gold production to kill the market. That has not happened. Gold production has actually declined even as the prices have more than tripled in recent years. I guess one could argue that the price for gold is still many hundreds or thousands of dollars below where it should be, and therefore there is still a strong demand for every ounce that is produced. But for every ounce that is produced, since it is a finite supply, there are fewer ounces left in the ground to extract, and the cheapest and easiest deposits are already gone. Higher prices will not cure that problem.

I am more than willing to do my due dilligence and consider the flipside. I have yet to see any explanation for bearish gold commentary that holds water. Even those who pretend we face prolonged inflation cannot give a concrete reason why that would be bad for gold.

cheers!

mike