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<p>[QUOTE=&quot;gxseries, post: 423716, member: 4373&quot;]Thank goodness someone that knows what I&#039;m talking about, thank you vegasvic. I own you one. <img src="styles/default/xenforo/clear.png" class="mceSmilieSprite mceSmilie1" alt=":)" unselectable="on" unselectable="on" /> </p><p><br /></p><p>Mutual funds indeed plays one of biggest role in how much minerals to mined and extracted. The key point in my opinion is more on the likelihood of prices versus what grade to mill essentially dictates the overall production level. This is under an assumption that there are enough blasted rocks to work with in the first place. Most mines usually have a stockpile of high grade and low grade ore, the lower grades are usually stockpiled for times when metal prices are economical to extract, otherwise would have been a waste product. Some mines as far as I know are extracting as low as 0.4g Au/tonne although I&#039;m not too sure about silver. That said, that actually would REDUCE the level of production. Why sell the high quality grade when you can sell the waste product and make a profit out of it? </p><p><br /></p><p>Mining costs are sometimes not well declared or difficult to go as planned as the biggest factors are usually fuel cost, labour cost, maintenance cost, parts costs, unexpected geological constraints, etc. By the time you get an quarter annual report, you would wonder what&#039;s going on. I don&#039;t believe one can get an accurate picture of how violate mining costs are these days unless one has all data. The last I heard was about 200-300usd on average when gold prices was at 400-450usd prior to 2003. </p><p><br /></p><p>The biggest drama in metal pricing history is from the 1990s when prices just plummeted and stagnated, one of the biggest cause maybe the huge gold reserve sell-off by the Bank of England as well as other Reserve Banks. During this period of time, prices were low and many mining companies were either forced to cut costs, fire staffs, kill off exploration or just shut down completely. It was this period of time when an estimate of more than half of geologists were fired and a fair number of staffs struggled to live. </p><p><br /></p><p>The first hint of high metal prices started in 2003 when China bought up most of the mining companies excess reserves where previously more than one month&#039;s worth of resources were stocked went down to less than a week&#039;s worth. Ramping up the production level is possible but due to little level of investment done on exploration, this seemed to have an image to investors of something like &quot;oh crap, that&#039;s all the resources that we have, we have to stock up!!!&quot; It is inevitable that in general, most metal prices had to go up to compensate for the low level of investment. One example is the palladium price back in 2000 when it shot over 1000USD briefly. </p><p><br /></p><p>In my opinion from what I see, it seems that people are unaware that if metal prices are kept on going for too long, major mining companies would have then found sweet deposits that can be economically mined, have the infrastructure developed and from there, cost production will drop down unless something drastic happens such as oil shock price or sudden change in government regulations.&nbsp; A good read maybe at <a href="http://www.infomine.com" target="_blank" class="externalLink ProxyLink" data-proxy-href="http://www.infomine.com" rel="nofollow">http://www.infomine.com</a>[/QUOTE]</p><p><br /></p>

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