o/t Diana - re: Gold to $325 = whoopee. = WRONG.
Diana; many Gold Mining stocks are very, very leveraged to the moves in the price of gold. That seems to be the fundamental misconception here - that if Gold merely rises from $275 to $325 - whoopee; as it's only a 19% move...
The leverage to the price of gold can best be shown by the performance of South African Gold Miner - DROOY in the most recent of Gold Bull Markets - 1992-1994.
In the 1992-94 Gold Bull - while Gold only moved 25% from $330 to $410; DROOY moved from $2 to $15 for a 650% return.
In the Gold Bull that some of us actually remember 1977-1980; Gold went from $110 to $850 and DROOY went from $2 to $50. The Price of Gold rose 670%, but DROOY rose 2,400 %.
DROOY has shown appreciation leverage from 3 1/2 time to 27 times the % move in the price of gold.
It is this type of "LEVERAGE" to the move in the price of Gold that makes the mining stocks so interesting.
I'm just using DROOY as an example here; I own it - but, it's not my largest Gold holding. Many factors go into calculating present leverage to the POG, hedges, production costs etc... DROOY allthough lightly hedged, is still "very" leveraged to the POG; I'm just using DROOY's past performance as an example - HGMCY, or GOLD for example are also highly, highly leveraged to the POG in today's environment and are larger cap stocks etc.
Gold has posted these returns in nearly clock-work like 7 year cycles; the last one ending in 1993-94; and that 7 year itch has just arrived once again...
The reason so many posters here are talking about Gold; is because the similarities to the bottom of the Oil cycle are so similar, the fundamentals AND the technicals so compelling and above all - some rather unique events (the historic Derivative position, the US Equity bubble etc)converging to make this very probably - the "mother of all Gold Bulls" when, not if; it arrives.... also; the discussion of the economy, the dollar vs. the Euro, the Fed, the BLS stats, the relationship of Oil to Gold & other commodities, to the equity markets etc - is all very, very relevant to this thread.
As mentioned earlier; with the "scroll down" feature - this is at most, a very minor, minor obstacle and most of us have kept our "gold" comments to non-market hours.
Exercising a little Hubris here; I also remember when my postings here on the "E&P's" were met with the same - "take it elsewhere" type of commentary... untill, that is - they outperformed the "strictly drillers" (VBG)!
Deja Vu all over again ?
Bet your @$$... |
