ML-Implode News - Gold miners still look expensive

``Earnings are highly sensitive to a falling bullion market. The sector generally breaks even around $1,200 an ounce, once all costs are taken into account. Analysts at Nomura estimate that a drop from $1,600 an ounce to $1,400 an ounce would cut earnings by 30-45 percent at big producers like Randgold and Polymetal. A similar slide would wipe out earnings at African Barrick Gold, and could put heavily-indebted Petropavlovsk in danger of breaching debt covenants next year.
Gold's peculiar trading dynamics mean the industry has limited options to contain the damage. The dominance of central banks and financial investors -- together nearly 40 percent of global demand for the metal last year -- complicates matters. It's hard to adjust output in line with a sudden withdrawal of financial demand. In any case, producers' ability to control the price by shutting unprofitable supply is also limited -- about a third of annual supply comes from melted scrap.''

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Gold miners still look expensive