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<p>[QUOTE=&quot;Daniel M. Ryan, post: 1277021, member: 32253&quot;]There&#039;s also something else. Standard economic theory assumes that prices deviate from a fixed number. Except for Schumpeter, it doesn&#039;t take account of &quot;demand revolutions&quot; where the level of demand is continually increasing over a long period of time. When PMs are in a long-term bull market, a demand revolution is taking place. Rational economic theory says that suppliers should, if anything, restrict production in such a case so as to take advantage of higher prices down the road.</p><p><br /></p><p>Of course, that strategy assumes we can know when the demand revolution ends - and we can&#039;t. So, reasonable mining managers - torn between boosting production and hoarding - tend to stick with the same production schedule and plow the added profits into exploration. Large sections of a producing mine are filled with ore that doesn&#039;t make the grade. At higher prices, those formations are worth a second look. </p><p><br /></p><p>There&#039;s also exploring undeveloped properties, but the lead time is l-o-n-g. </p><p><br /></p><p>FYI: in mining, a fairly good approximation of variable costs is &quot;cash costs.&quot;[/QUOTE]</p><p><br /></p>

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