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Strategies & Market Trends : Value Investing
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To: Mr.Gogo who wrote (48060)5/21/2012 12:10:37 PM
From: MCsweet  Read Replies (1) of 78742
 
AAB.TO,

I have owned AAB.TO under the mistaken impression at the time that gold miners were cheap relative to gold, that the discount to NAV was attractive, and that management would be able to add value to the portfolio. That was a huge mistake. Junior miners have gotten killed, and thus the NAV has too. Junior miners are way too dependent on investor sentiment (continually need to raise money to develop projects).

I have a lost a lot on this one -- it still seems attractive to me, but the risk remains -- the sector is too dependent on investor sentiment. It is preferable to invest in value plays where Mr. Market can't drain all the value away.

That being said, I'm inclined to hold this one in light of the attractive discount and the depressed nature of gold mining shares. I am not convinced any more that management is adding value. I hope they prove me wrong.

MC
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