If the miners are all mismanaged into insolvency new supply will stop and the day of reckoning will be delayed.*
A mine as "a hole in the ground owned
by a liar."
-attributed to Mark Twain
From ValueWalk:*By 'day of reckoning' I don't mean the decline to $875 by next fall, I'm referring to the decline to $100 by 2160. See:Gold prices soared during the recession, and have started to fall as investors get ready for the beginning of tapering, but both trends have happened almost independently of how gold companies are run. Global gold companies have cumulative impairments of more than $60 billion over the last 13 years, report Citi analysts Johann Steyn and Craig Irwin, and now that macro factors are turning against them more than a decade of weak fundamentals are going to finally make an impact.
The top 10 global gold companies have cumulatively impaired
“We estimate that the top 10 global gold companies have cumulatively impaired ~ $61 billion in operating fixed assets and goodwill since 2000,” write Steyn and Irwin. “This is equal to 51 percent of their current combined market caps.”The two analysts found that the destruction of economic value, measured as the difference between return on invested income and the cost of capital, was common for large gold companies. Of the ten largest, seven gold companies effectively destroyed value, one broke even, and two made a solid profit over 12 years....MORE
Repost--"The Price of Gold in the Year 2160" (GLD)
