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" Higher cost producers benefit more from a rising POG than lower cost producers as it improves their profit margins more in percentage terms."

Really? Can't really see the logic in that. Maybe I'm missing something. I'm no good at figures though.


Lets say the gold price is $1650.

Company ABC produces gold at a cost price of $500. He is our low cost producer. On an ounce of gold he makes $1150 profit, or 230%

Company BCD produces gold at a cost of $800. He is our high cost producer. On an ounce of gold he makes $850 profit, or 106%.

As the price of gold rises, ABC will always generate the higher percentage return, over the high cost producer.

If gold rose to $2000. ABC would be making 300% profit and BCD only 150% profit.