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<p>[QUOTE="medoraman, post: 3710555, member: 26302"]"Nothing to do with gold"? Huh? If oil goes to $130, do you think the miners will keep mining if gold stays the same? There is a direct, variable cost associated with the price of oil and gold cost to miners. I would GUARANTEE you that if oil were $130 and gold $800 an ounce new mine production would nearly cease, (maybe a few extremely low production cost mines would continue, and you would get some from copper mines assuming copper went up dramatically with oil). </p><p><br /></p><p>However, this is where it gets messy. Inventory could very easily cover this deficiency for a long time, something like a central bank lower their reserves. However, absent market fear, central bank actions, etc., as a BASELINE gold should always follow oil really. Make oil $20 a barrel for another decade and we could very well see $800 gold again. Maybe someday when Caterpillars are all electric this correlation would break, but I do not see it today. Today I see lowering interest rates and fear on the minds of Chinese, British, and a few other areas of the world.[/QUOTE]</p><p><br /></p>
[QUOTE="medoraman, post: 3710555, member: 26302"]"Nothing to do with gold"? Huh? If oil goes to $130, do you think the miners will keep mining if gold stays the same? There is a direct, variable cost associated with the price of oil and gold cost to miners. I would GUARANTEE you that if oil were $130 and gold $800 an ounce new mine production would nearly cease, (maybe a few extremely low production cost mines would continue, and you would get some from copper mines assuming copper went up dramatically with oil). However, this is where it gets messy. Inventory could very easily cover this deficiency for a long time, something like a central bank lower their reserves. However, absent market fear, central bank actions, etc., as a BASELINE gold should always follow oil really. Make oil $20 a barrel for another decade and we could very well see $800 gold again. Maybe someday when Caterpillars are all electric this correlation would break, but I do not see it today. Today I see lowering interest rates and fear on the minds of Chinese, British, and a few other areas of the world.[/QUOTE]
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