Inflation? What inflation?

I've been having so much fun in the subprime mortgage sector that I haven't been talking about gold much lately. Never fear: gold continues its upward march.

And this interesting news from gold miners last week:
Two of the world's largest gold miners reported robust fourth-quarter earnings Thursday due to higher selling prices but said production will slow in the year ahead because of rising operating costs.

The production forecast likely will translate into higher gold prices in the year ahead for both Newmont Mining Corp. and Barrick Gold Corp., speculated analyst Patrick Chidley, with Barnard Jacobs Mellet.

He noted that higher production costs have proved significant for the industry as a whole. "The gold price isn't really high enough and probably will move higher," he said.

Newmont said net income jumped more than threefold in the fourth quarter.

For the quarter ending Dec. 31, Newmont reported net income of $223 million, or 49 cents per share, compared with $62 million, or 14 cents per share, in the prior-year quarter. Revenue rose to $1.46 billion from $1.29 billion in the comparable period of the previous year.

While the Denver-based company's gold sales dipped to 2 million ounces in the fourth quarter from 2.4 million ounces a year ago, Newmont said its average realized selling price rose 31 percent to $619 per ounce from $472 per ounce.

However, the cost of sales rose to $322 per ounce from $232 a year ago, and likely will rise about 25 percent this year because of lower production and higher costs for labor and energy, among other factors, the company said.

Higher labor costs? How can that be? We don't have any inflation, remember? And energy costs? Well, those are so irrelevant that we exclude them from the core CPI. Inflation is supposed to only measure the prices of cheap consumer goods we buy from China. After all, who really needs things like food, energy, or housing when you've got cheap consumer electronics, clothing, and home furnishings?

It's still not too late to buy gold.

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