Gold scenario...
Big $ will flow into NEM, ABX, HM, PDG,ASL, BMG, TVX then a host of smaller producers. You will note that the first three have better looking charts for punching out of the current 5 month downtrend. Those can be played effectively with options for the most leverage(esp. ABX & NEM). ABX is hedged the best(gold sold forward at over $400/oz. so prfit is locked in ala RIG driller contracts). ABX is rumored to be considering winding down the hedges which would bank them 1 billion dollars US immediately. They would be counting on higher gold price in the future to offset the trade off. NEM has very small(relative to ABX) hegde program and lower gold production cost and larger total production. Bottom line, NEM more explosive but if ABX rolls up the hedge gold will explode taking all along for the ride. Don't count on ABX rollong up the hedge, but it could happen. With a billion extra $ in the bank, ABX will buy any number of marginal producers and try to grab huge market share to leverage into higher gold prices. There's ,ore, but either abx or nem is the near term winner. Once they level off then profits can be rolled into TVX, BMG options or the juniors like alta, cau, etc. |
