Quote from: bcp19 on August 30, 2013, 09:09:59 PM

Quote from: k9quaint on August 30, 2013, 08:03:40 PM

Quote from: Ejay424 on August 29, 2013, 09:27:21 PM

Quote from: icey on August 29, 2013, 08:37:53 PM

It'll work forever, you just won't make back your investment that's all.

I don't understand that, it will keep making coins forever.. but I wont get my investment back?

Think of it just like a gold mine. First you want to make sure there is more gold in the mine than what you paid. If the price of gold is $1400 an ounce, and you paid $140,000 for the mine, it had better produce at least 100 ounces of gold. So you retain a geologist to estimate how many ounces of gold are in the mine. If it is less than 100 ounces then you should not buy the mine. Now you can keep digging, but after you mine out the rich veins (low difficulty) you will get less and less out of a days work. After a while, it will cost you more to dig than you get back from selling any gold you manage to find.

Some people might say "but gold will rise in price and you will make money that way!". If that were true, then you should just buy gold. That way you don't have to bother digging for it, you know exactly how much you will have, and you will pay a cheaper price for it than overpaying for a gold mine.

Many years back, the gold companies knew they could use leeching techniques to extract minute quantities of gold from huge piles of dirt. Back then it was abandoned as too expensive.

That is right, they abandoned leeching gold it because it was not profitable. That was the correct decision at that point in time, even though later gold rose enough in price to make it profitable again. The reason they stopped doing it is because the people in charge of mining companies took courses in history: In 1845 aluminum was more expensive per pound than both gold and platinum. A bar of it was even displayed at the Paris Exhibition in 1855. This was because it was very expensive to separate out into a pure metal. In 1886 however, a new process for separating aluminum metal was discovered (we use the same process today) and now aluminum is $0.82 per pound. If anyone had invested in the old method of producing aluminum they would have lost their shirts.

The gold is still there and technically the mining company still owns it. They can extract it whenever they want to, and they do whenever it is profitable to do so.

Setting up a business that depends on a commodity rising in value in order to profit is just gambling.