A gold company should be valued not on how much gold it sells but how much it still has. AFP PHOTO/LUIS ACOSTA
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Just as global stock markets started to wobble in late 2007, a fund manager told me that I was wrong to expect a proper crash.I can hear tittering at the back – particularly as regular readers will know that I have a long-term soft spot for gold.This is clearly partly to do with the fall in the price of gold in the last four years. But there's more to it than that: look back over the last decade and you will see that while the miners have more than halved, the gold price itself has doubled. Over the past three years, supply has been falling as high-cost mines have begun to shut down (when the price of gold falls substantially below the cost of extraction, even idiots eventually stop digging).Something radical: Newcrest no longer spends more on digging gold out of the ground than it makes on selling that gold.I think the best funds in sector are the BlackRock Gold and General and the Tocqueville Gold Fund.
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