In the what it's worth category, and as a protest and expression against the duplicity and (note I did not say conspiracy, I wish to make that clear) of large hedgers, I e mailed this to the CEO's and CFO's of the following companies (AU, PDG, ABX, HM, NDY, KGC) plus a number of smaller hedgers. I would suggest that true gold bulls avoid these stocks. Vote with you pocketbooks, as there are other plays better positioned and more deserving of our investments. Feel free to borrow what you wish for your own communication. Suffice to say, I am f----g outraged at this point.
Dear---
As a substantial retail gold stock investor with a million dollar gold sector portfolio, I am a member of an endangered species. I am also an active commentator on forums such as Stockhouse and Silicon Investor, where I can tell you I say my piece. I have written articles for Gold Eagle.
I write to plead what I feel is an obvious case. I submit that your company needs to take a hard look at closing out the hedge position at these levels. Although, I see many qualities in PDG that are compelling, I have no interest in becoming an investor given your approach to gold. I, like most gold investors, am interested in a real upside play on gold, not one that will be capped. Shareholders will buy PDG in the expectation of higher POG, not because a particular CFO or hedge manager happens to be a clever trader (or more accurately a bear)in the gold market. Nobody wants to pay for that.
Which brings me to the bull case for gold. I am absolutely stunned by several "green light" signals emitting from important indicators. Besides the overly bearish sentiment indicators (only 27% bulls), there are classic ones such as the commitment of trader number, which show the often wrong large spec sector heavily short especially in relation to an increasingly small and thin open interest. At last report they were short close to six million ounces, and the savvy commercials were lined up long a corresponding number. This morning I noted that UBS Warburg said, "The changes in open interest and the large quantity of EFP's posted Friday indicate Comex speculators are probably now net short seven million ounces". And if that's not enough, clearing stats from LBMA point to an stunning lack of physical gold in the market, with only 19.7 million ounces transferred in January. The gold market appears acutely mismatched between the physical and paper.
It is also obvious that this gold market has been leaned on and ramped in a deluge of paper shorts that in all likelihood will be exceedingly difficult to cover. All it needs is a match. It is obvious that there will be heroes and goats, when this market takes off. Where will Placer Dome be when the rubber meets the road? Does your company's stock represent an open ended call on gold at a crucial time, or a slick hedge book? Which of those two options will now alienated gold stock shareholders remember after someone (perhaps you) starts a fire on this mismatched market? I trust you know what to do?
Sincerely,
Russ Winter |
