The most important final product in any public company lies in the reward to investors for their confidence in management and product. That means that values are translated efficiently into market recognition and therefore shareholder value.
Never before has the gold exploration, development and production industry faced unique challenges in the transmission of value to market price. The exploration, development and production of properties is today but one factor in valuation. Today retail investment interest in all these companies has been dwarfed by investment funds, index funds, option strategies and hedge funds, many of which have, in terms of age, managers that have never experienced the leverage of a gold company to the price of gold as to earnings.
The cost factors of this industry have risen, but are far from changing the industry’s leverage characteristic. As the price of gold rises, lower grade material becomes increasingly economic.
The industry is not without blame for inadvertently nurturing the idea of increased costs as its ...