"If gold falls to $275, all production would be suspended at Giant and other operations -- as well as other gold companies. It's the straight economics of running a business," Eacott said earlier this week.

He said Giant's cost is $310 (per ounce), but thanks to a number of new efficiencies and the impact of the new Supercrest project adjacent to the Giant property.

"The price of gold is the lowest it's been in 12 years," said Manford Mallory, a gold analyst in Toronto with Research Capital.

Last February the price of gold was $418 an ounce. Earlier this week, it was trading for just $318.

"I think we're stuck in this range and we won't rally back sharply soon. I think mining companies will have to make tough decisions and bite the bullet. Some will be temporary or permanent shut down decisions taken," Mallory said.

"For a lot of gold producers, their direct cash cost of production is in the $300 range. There's no question -- there's no profit margin if gold's at $320," he said.

"The central banks are huge holders of gold. They're converting to the idea that it's not worthwhile as a reserve asset. They're selling reserves to buy financial assets like treasury bills and bonds. Gold's not liquid, it doesn't have a yield," explained Mallory.

About 1.1 billion ounces of gold are officially held by the International Monetary Fund, central banks and other government agencies, many of which are in a selling mood.

Last year, for example, the Dutch government sold 300 tonnes, a third of its reserves.

The fall-out has already reached the NWT. Royal Oak may have to close its Colomac operation, which employs 250, by next spring.

Giant Mine employs another 320.

Mayor Dave Lovell was out of town and could not be reached for comment. But he said in a previous interview with Yellowknifer the city owes its existence to gold mines.

"The employment provided by the mines in Yellowknife is part of the critical mass which anchors another major industry -- transportation," he said.

Miramar Con Mine and Royal Oak Mines Inc. are two of the largest commercial taxpayers. Miramar Con pays the most at $1,099,535 and Royal Oak ranks third-highest at $692,265 last year. According to 1996 figures, there were 372 people employed at Con.

Giant asked for a concession on its taxes paid to the city but the request was turned down. It also sought a break on its power rates, but didn't get it.

"As far as Yellowknife goes, I'd be concerned about the two Yellowknife mines. Yellowknife should be concerned. Those two mines have contributed a lot to this community over 50 years and there's still a lot of people dependent upon them," said Doug Willy, vice-president of the NWT Chamber of Mines.

"And from the chamber's point of view, it's a major concern. We get a significant portion of our funding and support from Colomac and Lupin."

In the short term, Willy said he suspects the junior Northern gold exploration companies will suffer most.