If we get a short term rally; nem offers a good trading opportunity. I would not consider ABX at all, it will be a lackard, and will continue to under perform nem into the future.
I don't own ANY gold stocks at this time. So I feel I'm uniquely unbiased. Your comments demonstrate that you believe apples and oranges are comparable. The first thing you learn in securities courses is to separate those that are comparable, from those that aren't. Under your idea of direct comparisons, you suggest that NEM will out perform ABX. And in deed, if you look at the last 1-year chart for NEM and ABX, you might well think you are right.
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But the value of NEM comes from combined assets of both Silver and Gold. So how much Silver is produced relative to GOLD. Silver has held up well, primarily due to the buffet effect. But if one goes back to larger time frames, we see that NEM has under performed ABX continuously.
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Most importantly, if you look at the percent difference from the 4-year chart you can see that ILLREGUARDLESS of the price of gold, ABX has outperformed NEM by 20%. Now if you look at comparable, the closes to ABX are PDG. And that suggests that going forward, in any price rise in gold, PDG will outperform ABX. AKA PDG is better buy then ABX, which is still better then NEM. It is only the silver price that is holding up NEM. {That and some rumours involving ABX & NEM}
A side note, rising interest rates may be playing havoc with those companies/individuals who leased gold from the cb's and invested the proceeds in treasuries.
No. It depends on whether the lease rates were fixed, or variable. Most are fixed at negotiation. AND who's to say they bought treasuries in USA? Maybe they are also hedged in foreign assets, to which currencies are involved. Ever wonder why the 30yr CDN rates are lower then the 30yr USA rates? If Gold is to rise fast, those currencies like CDN and Australia should also rise. Thus:
$130 CDN bond at $0.6900 US/CDN := $89.70 USD may well become
$128 CDN bond at $0.7200 US/CDN := $92.16 USD
Those who try to over simplify, often make the most common mistakes. ABX is a CDN company that trades also on the NYSE, but invests GLOBALLY. To blindly suggest that Higher US rates will have a negative effect on ABX hedge is to ASSume that they are only investing in US treasuries. I can not stipulate that.
Hutch |
