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Gold/Mining/Energy : Gold Price Monitor

GDXJ 108.90

+4.2%

Dec 9 4:00 PM EST

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To: Don Green who wrote (37182)	7/15/1999 1:37:00 PM
From: Lightning	Read Replies (1) of 116805

Don: I believe that RMBS recently reported quarterly earnings of $0.08 per share. Extrapolating, that gives me annual earnings of $0.32. Dividing those august earnings into the share price gives me a PE ratio of 300+. All this for a company that showed minimal year-over-year increases in revenues and earnings. I'm sure that huge PE relative to growth makes sense in someone's world view, just not mine. On the other hand, if I own an ounce of gold, I can lease it out and earn 2-3% per year. That's TEN TIMES the earnings rate of return on RMBS. You'll say, but I don't care about earnings, dividends, book values, etc. (since these are archaic measures); all I care about are capital gains. But this belief relies on the greater fool theory of investing since no one in their right mind would pay 300+ times earnings for a stock outside of a speculative bubble. For me, I'll keep my ounce of gold in the expectation that it will be worth something in 10 years, a guarantee that RMBS common most assuredly doesn't come with!

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