via FTAlphaville - Capital Spending Crisis

While Izabella Kaminska is typically skeptical of the bull market in gold, the following comment on the capital spending crisis in mining, as well as perhaps the rest of the economy makes a certain point.

And that is a certain Net Present Value of your business will decline if your returns are denominated in currency rather than tied to gold, especially with the decline in interest rates.

The article may also indicate that gold prices are set to rise while commodities prices, or returns on commodities-related business are set to decline, because the return of cost of capital demands a bigger portion of the balance sheet.

Gold miners made terrible investments with the onset of the depression in Canada, because they suffered the crash very badly. But those projects that managed to provide a return to investors in dividends paid out very robust yields, even before the onset of devaluation.

http://ftalphaville.ft.com/blog/2012/07/18/1087711/the-capital-spending-crisis-miner-edition/

-F6