AS GOOD AS IT GETS
Although investing in gold stocks is currently much maligned, what other company, such as an ABX, offers a value investor
--a guaranteed price and demand for its products, and thereby rate of return based on price, for the next few years and beyond regardless of the state of the economy;
--no risk of another coming out with a better or patented product that would cause its products to be less valuable on a competitive basis or its inventory becoming obsolete as is often the case with a tech or other companies;
--if gold goes lower, the company becomes stronger relative to its peers due to its continued strong cash flow, and its ability to grow by acquiring assets at a cheaper price is thereby enhanced;
-- if gold goes higher, the company can roll over its hedges and take advantage of higher prices because of its superior balance sheet;
-- the company will be a survivor regardless of the price of gold and if others fail, it will become more valuable; and
--although the company will drop in price with gold, if it drops, as its assets become devalued, as an offset, due to stated constructive advantages that come into play with a drop in price, the greater will be the potential of it reaching significantly higher highs when gold recovers.
There is never a free lunch in the marketplace, but well-managed, hedged gold stocks such as ABX may be as good as it gets on a reward/risk basis in todays over-extended stock market.
By this post, I am not necessarily touting ABX, but rather is being made with an intent to pass on some ideas which may have generic merit for contemplation.
Vieserre |
