I hate to take Kinross's side in this, but it's clear to me that Ecuador is bargaining in bad faith. I don't think there's any intention at all to allow gold mining to go ahead. Copper, different story. It's an export earner, but more to the point, it's not monetary.

Correa is an economist as well as a politician. Correa the politician had to bend to environmentalists in his coalition to maintain power. That effectively killed off mining investment, except for one or two projects involving China. It also slowed oil development at a time when production was already in decline. Only the high price has saved them till now.

Correa the economist knows Ecuador is in a corner. Since the US dollar is their currency, they have no monetary control. They can't print, devalue, intervene - none of that is available to them - which leaves only the fiscal. But you can only tax so far before your revenues fall as people produce less and/or go underground. So, limited options there as well.

Oil accounts for about 40% of Ecuador's export earnings, so what happens if the price drops? And what happens if the US dollar declines against other major currencies? Be nice to have some gold under those circumstances, right? You might even need it to back a new currency if the dollar becomes a real problem.

FWIW, I think oil is going back to 70ish in the not too distant future. As for the dollar, who knows, but I notice more and more nations finding workarounds to avoid it, and a few of those have involved gold. I don't know where gold is going, but so far the trend is up, so ask yourself: if you were Correa would it make sense to export gold, or just leave it in the ground as future insurance?

One last point. At the time I couldn't figure out why ARU insiders cut and ran the way they did. Talk about your singed cats. Well, maybe this is why? This policy (if I'm not just making it up) had to be in place fairly early - maybe from the very beginning. Who knows? If it is true though, it's not hard to imagine friends in the know tipping them off as to what was coming.

Oh well... at least they picked the right guy to dump it on...LOL!

ebear